how to get home loan subsidy in India

Mark on July 17, 2025 No Comments

Buying a home is a dream for many, but affordability can be a challenge. To make housing more accessible, the Government of India provides home loan subsidies under schemes like Pradhan Mantri Awas Yojana (PMAY). These subsidies help reduce the financial burden for eligible homebuyers. In this blog, we will guide you through the process of getting a home loan subsidy in India, who can apply, and what steps to follow.

What is a Home Loan Subsidy?

A home loan subsidy is a financial assistance offered by the government to reduce the interest burden on home loans for eligible applicants. Under PMAY, the Credit Linked Subsidy Scheme (CLSS) allows homebuyers to get an interest subsidy of up to 6.5% on home loans, depending on their income group.

Types of Beneficiaries Under PMAY (Urban)

The subsidy is available to four income groups:

Economically Weaker Section (EWS) – Annual income up to ₹3 lakhs
Lower Income Group (LIG) – Annual income between ₹3 lakhs and ₹6 lakhs
Middle Income Group I (MIG-I) – Annual income between ₹6 lakhs and ₹12 lakhs
Middle Income Group II (MIG-II) – Annual income between ₹12 lakhs and ₹18 lakhs

Each group has different subsidy benefits and conditions.

Eligibility Criteria for Home Loan Subsidy

To be eligible for a home loan subsidy under PMAY:

The applicant or their family should not own a pucca house in any part of India.
The beneficiary should not have availed any central housing assistance earlier.
The property should be located in statutory towns as per 2011 Census.
Carpet area limits apply:
- EWS/LIG: Up to 60 sq. meters
- MIG-I: Up to 160 sq. meters
- MIG-II: Up to 200 sq. meters
A female member’s ownership or co-ownership is mandatory for EWS/LIG categories.

Steps to Get Home Loan Subsidy in India

Check Your Eligibility
Start by checking your income and property type. Confirm that you fall under one of the eligible income groups.
Apply for a Home Loan
Visit a bank or housing finance company (HFC) that is a PMAY partner. Apply for a home loan under the Credit Linked Subsidy Scheme.
Fill PMAY Subsidy Application Form
Some banks will do this automatically, while in other cases, you may need to fill out a specific form for the PMAY subsidy.
Loan Disbursement and Processing
Once your loan is sanctioned and disbursed, the bank will send your application to National Housing Bank (NHB) or HUDCO for subsidy processing.
Subsidy Credit
Once approved, the subsidy amount is directly credited to your loan account. This reduces your total loan amount and hence your EMI.

How Much Subsidy Can You Get?

EWS/LIG: 6.5% subsidy on loan amount up to ₹6 lakhs
MIG-I: 4% subsidy on loan amount up to ₹9 lakhs
MIG-II: 3% subsidy on loan amount up to ₹12 lakhs

Any loan amount above the eligible limit will not receive subsidy and will be charged at regular interest rates.

Documents Required for PMAY Subsidy

Aadhaar Card (mandatory for all family members)
Income Proof/Certificate
Property documents
Loan sanction letter
Affidavit confirming no pucca house in India
Construction agreement (for under-construction property)

Things to Keep in Mind

The scheme is only for first-time homebuyers.
Apply only through recognized banks or HFCs.
The subsidy is available once in a lifetime.
Processing time may take a few weeks, so be patient.

Conclusion

The home loan subsidy scheme under PMAY is a great opportunity for first-time buyers to own a house at a lower cost. By understanding the eligibility criteria, preparing the necessary documents, and applying through the correct channel, you can benefit from this government initiative. Make sure to consult with your bank or housing finance provider to ensure a smooth application process and maximize your savings on your home loan.