Home Buyers in 2025

Buying a home for the first time is a dream for many, but affordability often becomes the biggest hurdle. To encourage homeownership, both central and state governments offer subsidy schemes that reduce the overall cost of housing, making loans more accessible and affordable.

If you’re planning to apply for home loan in 2025, understanding these schemes can help you save significantly on upfront costs and EMIs.

Below are the top five home loan subsidy schemes available for first-time homebuyers in India:

Pradhan Mantri Awas Yojana – Urban (PMAY-U) 2.0

The PMAY-U 2.0 scheme is India’s flagship mission for achieving “Housing for All” in urban areas. It will be implemented as a five-year programme starting from 1st September 2024, offering financial support for the construction, purchase, or rental of homes.

The scheme consists of four verticals:

• Beneficiary-Led Construction (BLC)
• Affordable Housing in Partnership (AHP)
• Affordable Rental Housing (ARH)
• Interest Subsidy Scheme (ISS)

1. Beneficiary-Led Construction (BLC)

This component of PMAY-U 2.0 supports eligible families in constructing new pucca houses on their own land.

Key Benefits:

• Subsidy of ₹2.5 lakh per eligible EWS beneficiary
• Construction of all-weather pucca houses with a minimum carpet area of 30 sqm, extendable up to 45 sqm, conforming to National Building Code (NBC) standards.
• States/UTs may offer free statutory approvals, and construction is tracked through Geo-tagging for fund release in stages.
• Assistance is transferred via DBT in three instalments (40:40:20) based on construction progress.

Eligibility:

• Must belong to the EWS category (annual income up to ₹3 lakh).
• Must not own a pucca house anywhere in India.
• Must own land or be allotted non-transferable pattas by the state (if landless).
• Must apply via ULBs or Unified Web Portal with land and identity documents (including Aadhaar).
• Construction must be completed within 12–18 months from project sanction.

2. Affordable Housing in Partnership (AHP)

The AHP vertical under PMAY-U 2.0 promotes the construction of affordable homes through partnerships with public agencies, parastatals, or private developers.

Implementation Models:

• Model 1 – Public Sector Projects:
  Constructed on encumbrance-free government/public land, with a minimum of 100 EWS homes per project.

• Model 2 – Private Sector Projects:
  Developed on private land and whitelisted via a formal approval process. Eligible beneficiaries purchase homes using Redeemable Housing Vouchers (RHV).

Key Benefits:

• ₹2.5 Lakh subsidy per EWS beneficiary.
• Assistance is routed either directly (public projects) or via RHV (private projects).
  Projects must include at least 25% of homes for EWS.
• Houses built must have 30–45 sqm carpet area and comply with green building norms.
• Technology Innovation Grant (TIG) of ₹1,000/sqm (up to 30 sqm per DU) for projects using approved innovative technologies.

Eligibility:

• Applicant must be from the EWS category (income ≤ ₹3 lakh).
• Must not own a pucca house anywhere in India.
• Allotment is done via a transparent process, giving preference to PWDs and senior citizens for ground floor units.
• The project must be part of an approved AHP initiative and meet all RERA and scheme compliance norms.

3. Affordable Rental Housing (ARH)

The Affordable Rental Housing (ARH) vertical of PMAY-U 2.0 provides safe, hygienic, and affordable rental housing for urban migrants, working women, informal sector workers, and low-income groups who cannot afford to buy or construct a house.

Implementation Models:

• Model 1: Conversion of vacant government-funded houses into rental housing through Public-Private Partnerships (PPP) or by public agencies.

• Model 2: Private or public entities construct, operate, and maintain rental housing for EWS/LIG beneficiaries, including their own workers or those from nearby industries.
  

 Key Features:

• Housing options include:
  • Dormitories (up to 10 sqm)
  • Single-bedroom units (minimum 30 sqm)
  • Double-bedroom units (up to 60 sqm; max 33% of units in any project)

• Minimum project size: 10 dwelling units or equivalent dorm beds.
• Rent is based on local surveys and can increase up to 8% biennially, with a 20% cap over 5 years in Model 1.
• Projects must provide basic civic and social infrastructure like water, roads, health centres, and community spaces.
• Geo-tagging of progress via BHARAT App in five construction stages.

Eligibility:

• Tenants should belong to EWS or LIG categories, including:
• Urban poor, migrant workers, construction labourers, domestic workers, street vendors, industrial and hospitality sector staff, and working women.
  
• Rental agreements must follow the Model Tenancy Act (MTA) or state-modified rules.
• No ownership required, but tenancy agreements will define usage and compliance.

4. Interest Subsidy Scheme (ISS)

The Interest Subsidy Scheme (ISS) under PMAY-U 2.0 provides financial relief to homebuyers from lower- and middle-income groups by offering an interest subsidy on home loans. This helps make housing loans more affordable for those looking to purchase, re-purchase, or construct a home.

Key Benefits:

• 4% interest subsidy on the first ₹8 lakh of the housing loan.
• Maximum loan amount eligible: ₹25 lakh; maximum property value: ₹35 lakh.
• Maximum carpet area allowed: 120 sqm.
• Up to ₹1.80 lakh subsidy per beneficiary (credited in 5 annual installments).
• Net Present Value (NPV) capped at ₹1.50 lakh.
• Available on loans sanctioned on or after 1st September 2024.
• Subsidy is credited directly to the loan account via the lender, reducing the loan burden.
• Applies to loans for purchase, construction, or re-purchase of a home.
• Available only for active loans with more than 50% principal outstanding.

Eligibility:

• Income criteria:
• EWS: Annual income up to ₹3 lakh
• LIG: Up to ₹6 lakh
• MIG: Up to ₹9 lakh
  
• Applicant must not have availed subsidy earlier for any property.
• Loan must be for a house with a carpet area of up to 120 sqm.
• Must apply through a registered Primary Lending Institution (PLI).
• Applicant must register on the Unified Web Portal.
• Self-declaration or affidavit needed to prove income eligibility.
• Properties must meet the size and value limits set under the scheme.
• Not applicable in case of loan balance transfers or repeat subsidies for the same house.

5. Pradhan Mantri Awas Yojana – Gramin (PMAY-G)

While PMAY-U focuses on urban housing, PMAY-G caters to families in rural areas. It aims to provide “Housing for All” by assisting eligible rural households in building new pucca houses with basic amenities.

Key Benefits:

• Central assistance of ₹1.20 lakh per unit in plain areas.
• ₹1.30 lakh per unit in hilly states, difficult areas, and IAP districts.
• ₹12,000 additional financial support for construction of toilets under Swachh Bharat Mission (Gramin) or other schemes.
• The houses come with amenities like LPG connection (under Ujjwala Yojana), electricity (under Saubhagya Scheme), and drinking water.
• Unit size enhanced to 25 sq. meters including a dedicated area for cooking.
• Amount is transferred directly into the beneficiary’s account via DBT in stages.
• Assistance is also linked with MGNREGA wages for 90–95 days of unskilled labour.

Eligibility:

• Must be a rural household listed in SECC 2011 data (Socio-Economic and Caste Census).
• Priority to households without a pucca house, especially SC/STs, minorities, and disabled persons.
• Must not have received benefits under any similar housing scheme in the past.
• Identified through a transparent, technology-driven process using the AwaasSoft MIS platform and verified by Gram Sabha.

How to Apply for Home Loan Subsidy Schemes

To apply for any of the PMAY-U 2.0 verticals (BLC, AHP, ARH, ISS), follow these steps:

Check Eligibility

Review the specific criteria such as:

• Annual household income (EWS/LIG/MIG)
  
• Ownership status (must not own a pucca house)
  
• Location of property (must be in statutory towns or notified planning areas)
  
• Scheme-specific terms, e.g. first-time ownership, type of construction, loan amount limits, etc.
  

Choose a Registered Channel

• For BLC & AHP: Approach your Urban Local Body (ULB) or State Implementing Agency.
  
• For ISS: Apply through an approved Primary Lending Institution (PLI) like a bank or housing finance company.
  
• For ARH: Apply via ULB-contracted agencies or private developers (for rental only).
  

Documents Required

• Aadhaar and PAN Card
  
• Income Proof (Salary slips, ITR, or affidavit for EWS/LIG/MIG)
  
• Land/Property Documents (Ownership or Pattas for BLC)
  
• Self-declaration/Undertaking: Confirming no pucca house ownership anywhere in India
  
• Approved layout/building plan (where required)
  

Submit the Application

• Register your demand and upload documents via the Unified PMAY Web Portal.
  
• Offline submission also allowed through ULBs, SLNAs, or banks (depending on the vertical).
  
• Applications will be verified, geo-tagged, and approved by respective authorities.
  

Receive Benefits

• For BLC & AHP: Subsidy of 2.5 Lakh is released in installments via DBT based on construction progress.
  
• For ISS: Subsidy is credited upfront into your loan account, lowering the loan principal and EMIs.
  
• For ARH: Rental terms and allotment are handled directly by the managing entity.
  

Conclusion: Make Homeownership a Reality in 2025

Government-backed housing subsidy schemes under PMAY-U 2.0 can significantly reduce the cost of owning or renting a home, especially for first-time buyers or economically vulnerable groups.

Whether you build your home through BLC, buy in a developer project via AHP, rent under ARH, or take a subsidized loan under ISS, each route brings you closer to secure and affordable housing.

By choosing the right vertical and fulfilling the eligibility, 2025 can be your milestone year in achieving the dream of homeownership.