PMAY 2.0: In an era of expensive homes and high EMIs, PMAY 2.0 offers a significant relief for first-time homebuyers. Interest subsidies, tax exemptions, and easy loan options are making homeownership more accessible. Learn how to take advantage of these benefits.
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PMAY 2.0: Buying a home remains a significant challenge for ordinary people. High property prices and high interest rates put pressure on budgets. However, government schemes and new initiatives by banks and housing finance companies are helping first-time homebuyers reduce their EMI burden and choose longer-term loans.
According to experts, first-time homebuyers currently have several options. These not only reduce the initial EMI but also the total cost of the home.
Direct relief from PMAY 2.0
The most significant source of government support is the Pradhan Mantri Awas Yojana (PMAY) 2.0. Under this scheme, eligible home loan borrowers can receive an interest subsidy of up to ₹1.80 lakh on loans up to ₹25 lakh.
This subsidy is directly credited to the loan account in the form of annual installments over five years, reducing the outstanding principal and automatically reducing the EMI.
Which income groups will benefit?
PMAY 2.0 has been specifically designed for specific income groups. The annual income limit for the Economically Weaker Section (EWS) is set at ₹3 lakh. For the Low Income Group (LIG), this limit is ₹3 lakh to ₹6 lakh.
The Middle Income Group (MIG) includes families with an annual income of ₹6 lakh to ₹9 lakh. All these groups can benefit from the scheme if other necessary conditions are met.
Tax exemptions reduce the loan burden
In addition to subsidies, tax benefits also make home loans affordable. Under Section 24(b) of the Income Tax Act, a deduction of up to ₹2 lakh can be claimed on home loan interest.
Under Section 80C, a deduction of up to ₹1.5 lakh is available on principal repayment. Combining these benefits significantly reduces the total cost of the loan over time.
Flexible Loan Schemes of Banks
Lenders are also offering special products for first-time homebuyers. Step-up home loans offer low initial EMIs and gradually increase as income increases.
Longer loan tenures of up to 30 years are now becoming common, making monthly payments easier. Furthermore, lower interest rates and limited-term concessions are also being offered for women under certain government schemes.
What is PMAY-U 2.0?
The Pradhan Mantri Awas Yojana-Urban (PMAY-U) 2.0 is a scheme to further the goal of ‘Housing for All’ in urban areas. It launched in April 2022 and will remain in effect until December 2025.
Under this scheme, financial assistance and interest subsidy are provided for purchasing, constructing, or upgrading a home. The scheme covers the EWS, LIG, and MIG categories, and provides relief of up to ₹1.80 lakh under the Credit Linked Subsidy Scheme (CLSS).
Scheme Focus
PMAY-U 2.0 prioritizes widows, single women, senior citizens, persons with disabilities, transgender persons, SC/ST, and minority communities.
States have been given flexibility in house size and amenities. Affordable Rental Housing Complexes (ARHC) and new construction technologies are also being promoted for urban migrants.
How much government assistance is available?
Central assistance of up to ₹2.50 lakh per house is provided under Affordable Housing in Partnership (AHP) and Beneficiary-Led Construction (BLC).
The share of states and union territories is determined by region. For example, a 60:40 formula is applied in some areas, while a 90:10 formula is applied in others. Many states also provide additional top-up support.
What is the application process?
Applying for PMAY-U 2.0 can be done online through the pmaymis.gov.in portal. Applications are also available through authorized banks and housing finance companies.
Aadhaar, income proof, address proof, and a declaration that the applicant does not already own a permanent house are required for application. The last date for applying for this scheme is September 30, 2025.
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