What PMAY is, what it pays
Pradhan Mantri Awas Yojana (PMAY) is the Government of India's flagship housing scheme. It has two arms — PMAY-Urban (statutory towns) and PMAY-Gramin (rural households). The home-loan subsidy component is what most people mean when they say "PMAY":
- PMAY-Urban CLSS (1.0) — Credit Linked Subsidy Scheme. Active 2015 → 31 March 2022 for new sanctions. Now closed for fresh applications.
- PMAY-Urban 2.0 ISS — Interest Subsidy Scheme. Launched 1 September 2024, target window FY 2024–25 through FY 2028–29. The current active scheme.
- PMAY-Gramin — Direct grant of ₹1.2 / ₹1.3 lakh to rural BPL households to build a pucca house. Not a home-loan subsidy — covered separately at the bottom of this page.
Under PMAY-U 2.0 ISS, the central government pays an interest subsidy directly to your lender on a portion of your home loan. The subsidy is computed as the net present value of the interest differential, credited upfront to your loan account, and reduces your outstanding principal — so your EMI drops from day one rather than month-by-month.
Current scheme status
PMAY-U 2.0 is the active scheme. The cabinet approved it in August 2024 with a target of assistance to 1 crore urban poor and middle-class families across five years. The ISS (Interest Subsidy Scheme) component covers home-loan borrowers; AHP, ISSR, and BLC verticals cover beneficiaries who get an actual housing unit or a construction grant.
Implementation is staggered — empanelment of PLIs (Primary Lending Institutions) and state nodal agencies is being rolled out over FY 2024–25 and FY 2025–26. Always confirm current eligibility, lender empanelment, and exact subsidy amounts on the official portal (pmay-urban.gov.in) before applying. Older articles citing the lapsed PMAY-U 1.0 brackets (₹2.67L for EWS / LIG, ₹2.35L for MIG-I, ₹2.30L for MIG-II) are no longer applicable to new applications.
Eligibility under PMAY-U 2.0 ISS
Headline criteria for the interest subsidy:
- First-time home buyer — the applicant or any family member (spouse, unmarried children) must not own a pucca house anywhere in India.
- Household income up to ₹9 lakh per annum, covering EWS / LIG / MIG categories.
- Property value up to ₹35 lakh; loan amount eligible for subsidy up to ₹35 lakh; subsidy computed on the first ₹8 lakh of the loan.
- Aadhaar mandatory for the applicant.
- Female ownership or co-ownership preferred — mandatory in most cases with limited exceptions (single-male households, plot already in male name, etc.).
- Property in a statutory town as defined by Census 2011 plus subsequent notifications. Most large municipalities qualify; verify your town's eligibility on the portal.
Eligibility detail has tightened compared to PMAY-U 1.0 — the MIG-I and MIG-II income brackets (up to ₹12L and ₹18L respectively) that PMAY-U 1.0 covered are not part of PMAY-U 2.0 ISS. Buyers in the ₹9–₹18 lakh household income range who would have qualified under 1.0 no longer qualify.
How much you actually save
Under PMAY-U 2.0 ISS, the headline subsidy is ₹1.80 lakh disbursed over 5 years in 5 yearly installments of ₹36,000 each, credited to your loan account. The subsidy reduces your outstanding principal, which in turn reduces your EMI from the next reset.
Illustrative impact on an ₹8 lakh loan at 8.5% for 20 years:
| Scenario | Loan principal | EMI | Total interest over 20yr |
|---|---|---|---|
| Without PMAY | ₹8,00,000 | ~₹6,940 | ~₹8.66 lakh |
| With PMAY (after subsidy) | ~₹6,20,000 (₹1.80L subsidy credited) | ~₹5,400 | ~₹6.86 lakh |
| Net benefit | ₹1.80 lakh principal cut | ~₹1,540 / month less | ~₹1.80 lakh less interest |
Model your own scenario with the Home Loan EMI calculator — compute the EMI on your nominal loan, then on the loan reduced by ₹1.80 lakh, and the difference is your monthly saving.
How to apply
The PMAY application is bundled with your home loan application — you do not apply separately to the government.
- Confirm with your prospective lender that they are a PMAY-empanelled PLI (Primary Lending Institution). Most public-sector banks, large private banks, and housing finance companies are. Check the current PLI list on pmay-urban.gov.in.
- Submit your home loan application along with the PMAY beneficiary form, Aadhaar, household income proof, and property documents.
- The PLI uploads your application to the central PMAY portal for verification by the nodal agency (NHB for housing finance companies; NHB / HUDCO / SBI for banks).
- On approval, the subsidy is credited to your loan account by the nodal agency. The lender recomputes your EMI downward at the next reset.
Typically 3–6 months from loan disbursement to subsidy credit. The EMI you pay during the gap is at the higher unsubsidised rate; once the subsidy lands, the lender either refunds the excess or adjusts future EMIs.
Stacking with 80C and 24(b) deductions
The PMAY subsidy stacks on top of Section 80C and Section 24(b) — it is not income for the borrower and does not reduce either deduction.
- Under the old tax regime, you still get up to ₹1.5 lakh/yr on principal repaid (80C, shared with PPF / EPF / ELSS) and up to ₹2 lakh/yr on interest paid (24(b) for self-occupied), based on the full interest and principal actually paid to the lender.
- Under the new tax regime, neither 80C nor 24(b) is available on self-occupied home loans, regardless of PMAY.
Practical implication: a PMAY-eligible borrower in the old regime captures both benefits — the upfront subsidy plus the annual interest/principal deductions. In the new regime, only the upfront subsidy. Run the comparison both ways before locking the regime for the year you take the loan.
PMAY-Urban vs PMAY-Gramin
The two share branding but work differently:
- PMAY-Urban — covers urban households across 4,331+ statutory towns. Four verticals: ISS (interest subsidy on a home loan), AHP (Affordable Housing in Partnership — slum/project-based housing), ISSR (In-situ Slum Redevelopment), BLC (Beneficiary-Led Construction grant). Implemented by Ministry of Housing and Urban Affairs (MoHUA). Application via lender for ISS; via state urban housing department for the others.
- PMAY-Gramin — covers rural BPL households. Typically a direct grant of ₹1.2 lakh in plain areas / ₹1.3 lakh in hilly or difficult terrain, in three installments, to build a pucca house with basic amenities. Not a home loan subsidy. Implemented by state rural development departments; you apply through your gram panchayat. Implemented under Ministry of Rural Development.
For an urban first-time home buyer with a home loan, PMAY-U 2.0 ISS is the relevant scheme. For a rural household building their own house with limited income, PMAY-G is the relevant scheme.