How Does the Pradhan Mantri Awas Yojana Work in India?

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PMAY, generally recognized as Pradhan Mantri Awas Yojana, is a government of India initiative to provide affordable housing. This scheme has been specially developed to help the urban poor. This scheme falls under the category of a “credit-linked subsidy scheme” (CLSS) that targets the middle-income group as its beneficiaries. The interest rate for PMAY is 6.50% per annum, which can be repaid over 20 years. This scheme was first introduced on June 25, 2015, but it has now been extended until December 31, 2024. Although this scheme aimed to provide houses to everyone on the beneficiary list by March 2022.

There is also a Pradhan Mantri Awas Yojana—Gramin (PMAY-G) that was named the Indira Awas Yojana earlier. This scheme was started in 2016 with the main objective of developing housing units in rural regions for the beneficiaries. This scheme is available across the nation except for Delhi and Chandigarh. In this category of PMAY, the central government and the respective state governments will share the expense of making these house units. The ratio for the plain region is 60:40 for the plain and 90:10 for the north-eastern and hilly regions.

Features of PMAY 

  • One of its highlights is that if you are differently abled or a senior citizen, you will be assigned to the scheme’s ground floors.
  • In the Pradhan Mantri Awas Yojana, the government provides a subsidy rate of 6.50% p.a. on a housing loan for a term of 20 years. 
  • The PMAY scheme in India covers urban areas in the country. They comprise 500 class 1 cities and 4000+ statutory towns. The initial plan was to implement this scheme in three phases. 
  • In PMAY, the government laid heavy emphasis on the use of sustainable development principles, eco-friendly technologies, and modern development mechanisms. 
  • This scheme is only for those who don’t have their own home. If you own a house, then you will not be eligible to apply for PMAY. Although you can use this scheme even if you already own a home if you want to upgrade to a Pucca house,

Categories of Subsidies on Pradhan Mantri Awas Yojana

This scheme has been developed by keeping in mind the earnings of the various segments of the country. Accordingly, the beneficiaries of PAMY are divided into four segments. 

Economically Weaker Section (EWS) – Annual income of less than ₹3 lakhs

This category in PMAY can become a beneficiary of up to 6 lakhs having an interest subsidy of 6.50%. If your family is in the category of the EWS section then you can buy a house with a maximum 30 square meters of carpet area.

Lower Income Group (LIG) – Annual income of ₹3 to ₹6 lakhs.

In the lower income group category, families can avail of a loan up to Rs. 6 lakhs with a 6.50% p.a. subsidy on the interest rate. In this category as well, your family can purchase a house with a maximum carpet area of 30 square meters.

Middle Income Group 1 (MIG 1) – Annual income of ₹6 -₹12 lakhs.

Under the Pradhan Mantri Awas Yojana, families in the middle-income category (Category 1) may get a loan of up to Rs. 9 lakhs, on which there is an interest subsidy of 4.00% p.a. If your family falls under the MIG 1 category, you can purchase a house with a maximum carpet area of 160 square meters.

Middle Income Group 2 (MIG 2) – Annual income of ₹12 – ₹18 lakhs.

Under Pradhan Mantri Jan Awas Yojana, the middle-income group category II, your family may get a loan of up to 9 lakhs, on which there is an interest subsidy of 3.00% p.a. If your family falls under the MIG 2 category, then you can purchase a house with a maximum carpet area of 200 square meters.

How Does PMAY Work? 

The benefits under the Pradhan Mantri Awas Yojana can be availed if you want to buy a new house from a developer and want to acquire a house from the secondary market. You can also avail of loans under this scheme if you want to upgrade your kaccha houses to pucca houses.

For example, let’s assume you fall under MIG category 2 and your family wants to buy a house for ₹ 60 lakh. In the usual scenario, you will have to make the mandatory minimum down payment of 20 percent, i.e., ₹12 lakh, and take a loan for the remaining ₹48 lakh. Whereas under the Pradhan Mantri Awas Yojana, you will get a subsidy of 3 percent up to ₹12 lakh, so the home loan interest rate will be applicable only on the remaining ₹36 lakh.

How to Apply for the Pradhan Mantri Awas Yojana?

There are several options for you to apply for PMAY like Pradhan Mantri Awas Yojana Gramin online apply. There aren’t many complications involved in applying for this scheme. The application process for PMAY is very easy, and the interface for the online portal is also very user-friendly. There are only a few documents that you require to apply for this scheme, like your Aadhar card number, PAN card, etc. As soon as you open the portal, all you need to do is open the screen and follow the directions as given. Fill up the application as per the instructions, and you will be an applicant for the PMAY scheme. 


Everybody deserves to live under a good and safe roof that they can call home. The government has been making a lot of efforts to help people buy their dream homes. This is why they started the credit-linked scheme for people who couldn’t afford to buy homes by themselves. 

This scheme has been really helpful in the elimination of poverty and homelessness in India. The government’s efforts should always be complemented by those of private companies as well. For more information on PMAY and other loans, visit the Piramal Finance website.