How the PMAY CLSS Scheme is helping home buyers

The more things change, the more they remain the same. Nowhere is this axiom more pronounced than in our penchant for buying a home. The millennial generation aspires to buy a home just as their parents and grandparents before them did. Let’s unlock the keys to how you can move into your dream house - with a little help from the Government.

Need For PMAY

 How the PMAY CLSS Scheme is helping home buyers

With rising disposable income and better lifestyle indicators, house-buying can sometimes take a backseat as it is a huge commitment. Home developers, too, have increased their offerings in the affordable housing category that is a major recipient of government subsidy. To help such prospective home buyers, the Government of India has launched an ambitious programme to provide housing for every Indian by 2022 (or earlier). To achieve this target, it has also expanded the benefits of its flagship scheme Pradhan Mantri Awas Yojana (PMAY). Here’s how the revamped scheme will help build 2.95 crore houses by 2022 through PMAY subsidy.


PMAY already has a wide reach as it facilitates the needs of economically weaker households to buy a house. One of the most important components of PMAY is the Credit Linked Subsidy Scheme (CLSS) that subsidises the interest rate at which homebuyers take loans to finance their dream house. The government pays an upfront subsidy of upto Rs.2.67 lakhs on the eligible loan amount thereby assisting in reduction of monthly EMIs for homebuyers.


Here’s an example of how it works. If a family’s household income is up to Rs. 6 lakhs and the property that he is purchasing has a carpet area of up to 60 square meters (approximately 645 square feet), the subsidy calculation is pegged at 6.5% for a period of 20 years and subsidy value of up to Rs.2.67 lakhs is paid by the Government. This not only reduces the homebuyer’s loan amount upfront but also helps him save every month on account of reduced EMI payments

PMAY CLSS At A Glance:

Lower Income Group - Annual income between Rs. 3 Lakh and Rs. 6 Lakh | Interest Subvention Benefit: 6.5% | Subsidy Loan Amount Limited To: Rs 6 lakh

Middle Income Group I - Annual income within Rs. 6 Lakh - Rs. 12 Lakh | Interest Subvention Benefit: 4% | Subsidy Loan Amount Limited To: Rs 9 lakh

Middle Income Group-II - Annual income within Rs. 12 Lakh - Rs. 18 Lakh | | Interest Subvention Benefit: 3% | Subsidy Loan Amount Limited To: Rs 12 lakh

Other Important Factors:

It is pertinent to note that applicants must declare that they do not own a pucca house in their name. It is also necessary to register ownership with a female member of the family.

Once the applicant fulfils these conditions, the lending institution will do all the paperwork and assist the applicant to avail the benefit under the PMAY CLSS scheme by submitting the application with the nodal agencies recognized by the Government of India. However, the discretion to extend the benefit under the scheme to the applicant lies solely with such nodal agencies.

Final Thoughts:


While PMAY scheme has been a success with the LIG segment, the recent addition of homebuyers under Middle Income Groups (MIG) with a household income upto Rs. 18 lakhs is a positive step towards the Government’s target of ‘housing for all’ by 2022. This is a positive step that is a win-win for all the stakeholders involved. The Government’s target looks achievable as home-buyers get a further boost in their quest to buy their first house while lifting demand for the real estate sector with reputed banks and NBFCs such as HDFC acting as the perfect catalyst for the growth and inclusion of the nation’s citizens.

This article is inspired by HDFC Ltd’s company blog. Head to HDFC Blog and find its entire collection of stories, videos, infographics and listicles on all about owning a home, availing a home loan and accentuating your space with the right decor.

This is a partnered post. 

Updated Date: Sep 13, 2019 11:39:13 IST