Pradhan Mantri Awas Yojana 2020 – A complete guide

Are you planning to build your first house? This is now possible under the government initiative of Pradhan Mantri Awas Yojana. Without wasting time let’s go through the details.

What is Pradhan Mantri Awas Yojana?

The Indian government has started a subsidized home loan scheme “Pradhan Mantri Awas Yojana” which is an initiative under “Affordable Housing for all by 2022” in the country. You also get a credit-linked subsidy on the loan.

You can buy a new home or a flat, construct a house or you can enhance your home by adding toilet, kitchen or adding another room. In 2019, more than 15 Lakhs house has been constructed and more than 1 crore loans have been sectioned under this scheme.

Just like any other government scheme the structure of this Yojana is also not simple. Let’s understand this scheme from every aspect.

Read: How to Apply for Bank Loan under Mudra Yojana

Objectives of Pradhan Mantri Awas Yojana

Pradhan Mantri Awas Yojana

Who is eligible for Pradhan Manti Awas Yojana?

There are few criteria which one should met to be eligible for a concessional home loan under PMAY.

  1. A first time home buyer. The beneficiary should not own a pucca house either in his/her own name or in the name of any of his/her family members in any part of India. Family members include husband, wife and unmarried children.
  2. Pradhan Mantri Awas Yojana is for lower-income groups (LIG) and Economic Weaker Sections (EWS) people. To be eligible for PMAY Income,
    • In case of EWS, your income should not exceed Rs.3 lakhs per annum
    • In case of LIG, your income should not exceed Rs.6 lakhs per annum.
  3. The carpet area of houses being constructed under Pradhan Mantri Awas Yojana should be up to 30 square meters of EWS and 60 square meters LIG category.

You will get all the details of PMAY eligibility criteria in the table below.

Groups Annual Income Maximum loan amount for subsidy Interest rate for subsidy Maximum Subsidy Amount Allowed Area
Economically Weaker   Section (EWS) Upto Rs. 3 Lakhs Upto Rs. 6 Lakhs 6.50% Rs. 2.60 Lakhs 30 sq. mt. (322.917 sq. ft.)
Low Income Group (LIG) Rs. 3-6 Lakhs Upto Rs. 6 Lakhs 6.50% Rs. 2.60 Lakhs 60 sq. mt. (645.834 sq. ft.)
Middle Income   Group-1 (MIG 1) Rs. 6-12 Lakhs Upto Rs. 9 Lakhs 4% Rs. 2.35 Lakhs 160 sq. mt. (1722 sq. ft.)
Middle Income   Group-2 (MIG 2) Rs. 12-18 Lakhs Upto Rs. 12 Lakhs 3% Rs. 2.30 Lakhs 200 sq. mt. (2152.78 sq. ft.)

Read: All about Benami Property / Transactions

Credit Linked Subsidy or Rebates on Home Loan Interest (UPDATED)

You can avail benefit of rebate (subsidy) on home loan interest, under the following criteria.

  1. Loan Amount up to 6 lakhs: If the Home Loan amount is up to Rs.6 lakhs then interest on home loan will be charged at a concessional rate of 6.5 percent per annum. Here the rate of interest is fixed at 6.5 percent per annum.
  2. Loan Amount up to 9 lakhs: If home loan amount is up to Rs.9 lakhs then the beneficiary will get home loan interest subvention of 4 percent per annum. This means if the prevailing interest rate is 9% then the home loan will be provided at 5% interest rate.
  3. Loan Amount up to 12 lakhs: Similarly, if the home loan amount is up to Rs.12 lakhs then the beneficiary will get home loan interest subvention of 4 percent per annum. This means if the prevailing interest rate is 9% then the home loan will be provided at 6% interest rate.
  4. Rural Areas: Government has also sanctioned interest subvention of 3 percent for the neo middle and middle class in rural areas for loans of up to Rs.2 lakh taken in 2017, for new housing or extension of housing in rural areas.

A few more important conditions to consider

  1. The tenure of the home loan shall be maximum of 15 years and no default is to be made from the beneficiary side to avail the subsidy benefit.
  2. In case the home loan amount exceeds R.12 lakhs then the reduced interest rate shall be applicable only up to Rs.12 lakhs and on remaining loan amount prevailing interest rate shall be applied. For example, If a home loan of Rs.15 lakhs is taken at 9% interest rate for tenure of 15 years then the interest subsidy of 3% would be applied on Rs.12 lakhs and on remaining Rs.3 lakhs interest rate of 9% is applicable. The subsidy would be credited upfront to the beneficiary loan account resulting in reduced EMI.

Subsidy Amount Calculation under Pradhan Mantri Awas Yojana

Pradhan Mantri Awas Yojana Calculator

How to Apply for Pradhan Mantri Awas Yojana?

Step 1: Log on to the Pradhan Mantri Awas Yojana official website at  https://pmaymis.gov.in/

Pradhan Mantri Awas Yojana
Step 2: Under the citizen assessment drop-down, select the benefits under three components as shown below

Pradhan Mantri Awas Yojana

Step 3: Now enter your Aadhaar details and or virtual ID, tick the checkbox and click on check.

Pradhan Mantri Awas Yojana

Step 4: After filling in the Aadhar details, you will be redirected to the application form stage where you will have to fill in the details accurately.

Pradhan Mantri Awas Yojana

Step 5: After filling the information, tick on the checkbox, then enter the Captcha code and click on ‘Save’.

Pradhan Mantri Awas Yojana

The application is now complete and you can take the print out now.

Once you are allotted a house under PMAY you can choose to avail subsidized home loan through any Scheduled Commercial Banks (like SBI, BOB, PNB, ICICI Bank, etc.), Regional Rural Banks (RRBs), Housing Finance Companies, Urban Cooperative Banks, and State Cooperative Banks.

Read: Peer to Peer loans vs bank loans in India

How did you like the guide, tell me in the comments.

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