PMAY-Urban 2.0 Interest Subsidy: Who Qualifies and How Much Chennai Home Buyers Can Get

In short: under the Interest Subsidy Scheme (ISS) of PMAY-Urban 2.0, an eligible family with an annual income up to ₹9 lakh can get up to ₹1.80 lakh of interest subsidy on a home loan of up to ₹25 lakh, for a house worth up to ₹35 lakh. It applies to loans sanctioned and disbursed on or after 1 September 2024.

What the Interest Subsidy Scheme is

Pradhan Mantri Awas Yojana-Urban 2.0 (PMAY-U 2.0) is the Central Government's urban housing scheme. It has four parts, called verticals. The one that matters to a buyer taking a home loan is the Interest Subsidy Scheme (ISS), which the Union Cabinet's release describes as a Central Sector Scheme run directly by the Centre.

It replaces the earlier Credit Linked Subsidy Scheme (CLSS) of PMAY-Urban. If you read about a subsidy of ₹2.67 lakh, that figure is from the old CLSS and does not apply to new loans.

Who is eligible

The Ministry of Housing and Urban Affairs (MoHUA) groups eligible households by annual income:

• No pucca house anywhere in India. The family must not own a pucca (permanent) house anywhere in the country, according to the Cabinet release.
• Family means husband, wife, and unmarried sons and/or daughters, as Indian Bank's ISS note sets out.
• Income proof: the loan applicant gives a self-certificate or affidavit of income, according to MoHUA.
• Purpose: buying, re-buying or building a house.

The limits on the loan and the house

MoHUA says a loan above ₹25 lakh or a house above ₹35 lakh is not eligible. It is also not eligible if the lender assesses the family income or property value above the limits.

For Chennai buyers, the ₹35 lakh house value cap is the limit to check first. Compare it with the full price in the sale agreement, including car parking and other charges, not just the base rate per sq.ft.

How the subsidy is paid

• The subsidy is released in five equal yearly instalments, by direct benefit transfer into your loan account.
• Each instalment is released only if the loan is still running and more than half the principal is still outstanding, according to MoHUA.
• Your lender credits the subsidy upfront by reducing your loan principal, and you pay EMIs on the reduced principal.
• The house is geo-tagged: after the first instalment for a completed house, and before each instalment for a house under construction.

Watch out: because the subsidy depends on more than 50% of the principal being outstanding, prepaying a large part of the loan early can stop later instalments. Ask your lender how prepayment affects your subsidy before you prepay.

Who cannot claim it

• A property can be subsidised only once. If the house has already had the subsidy, a later buyer cannot claim it again.
• Family members borrowing for the same house, together or separately, are counted as one family for income and benefit.
• Balance transfers: if you move the loan to another lender, you cannot claim the subsidy again. If you did not claim it with the first lender, you are not eligible after the transfer.
• False income declarations can lead to legal action, MoHUA warns.

How to apply

• Check the limits first: income, loan amount, house value and carpet area.
• Register on the PMAY-U 2.0 Unified web portal. MoHUA says the application is then forwarded to your lender (called a Primary Lending Institution, or PLI).
• Take the loan from a lender that runs the scheme. Many banks and housing finance companies publish their PMAY-U 2.0 pages; Indian Bank, Axis Bank and IDBI Bank are examples.
• Keep the house details ready for geo-tagging, and keep your loan running as required until all five instalments are paid.

Want to see homes within these limits? Browse our property listings and check each project's price, carpet area and RERA status, then confirm eligibility with your lender.