Home Loan Pradhan Mantri Awas Yojana

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Home Loan Pradhan Mantri Awas Yojana

In the following article we will cover what a home loan entails, how it works, and how the Pradhan Mantri Aawas Yojana (PMAY) offers assistance in the process.

What is meant by a home loan?

To purchase a house of your own is essentially one of the biggest decisions faced by an individual or a household. To fulfil this dream of owning a home, you may or may not need some financial assistance. This is where a home loan comes to your aid. For individuals who wish to own a home but lack appropriate funds to fulfil that wish at that time, the option of a home loan is a god-send. 

So, a home loan is primarily a loan amount that you borrow from a bank or any other fund house or financial institution to sponsor the purchase of your own home. You can opt for a home loan for buying a house as well as for buying a plot of land on which you wish to construct your home. You can also opt for a home loan if you need financial aid for renovating or repairing your existing home.

When you choose to opt for a home loan, you are borrowing money and in turn, promising to pay back that money with additional interest. The home loan interest rate varies from one financial institution to another.

You can also choose to keep the home that you purchase as 'collateral'. This means that you only own the home as long as you fulfil your promise of paying back the loan amount. In case you fail to pay back the money, the bank or fund house has the right to seize your property. Therefore, as long as you haven’t fully paid back your loan, the ownership of your home becomes subject to your ability to pay back that loan.

Who is eligible to borrow a home loan?

To be able to take out a home loan from a bank or fund house in India, you need to first meet the necessary eligibility criteria. This is elaborated below:

To be eligible to borrow a home loan as a salaried individual, you must be

  • A resident of India
  • Aged between 23 and 62 years
  • A salaried employee with work experience of a minimum of 3 years

To be eligible to borrow a home loan as a self-employed individual, you must be:

  • A resident of India
  • Aged between 25 and 70 years
  • A self-employed individual with a continued work experience in a business for a minimum of 5 years

Conclusively speaking, eligibility to borrow a home loan largely depends on the price of the property and the repayment capacity of the borrower.

lowest home loan interest rate offered by banks:

The Reserve Bank of India has made it compulsory for all commercial banks and other fund houses to link the interest rates they offer on various retail loans to an external benchmark system. As a result, most commercial banks and fund houses have chosen to link their interest rates to the Reserve Bank of India’s repo rate.

Now, here are the top 10 commercial banks that offer the lowest interest rates on home loans for salaried employees:

  • Indian Bank
  • Union Bank of India
  • Bank of India
  • Bank of Baroda
  • Central Bank of India
  • ICICI Bank
  • Punjab and Sind Bank
  • Canara Bank
  • State Bank of India
  • IDFC Bank

    Pradhan Mantri Awas Yojana:

In India, property prices and the cost of lands are on an incessant surge. As a result, the capacity of individuals to afford a home or buy land is reducing significantly.  The affordability of individuals to own a home in a metropolitan city is especially reduced because of this surge.

Therefore, to address this issue and to promote and assist sustainable and reasonable housing, the government of India introduced the Pradhan Mantri Awas Yojana in June 2015.

The Pradhan Mantri Awas Yojana, also known as PMAY, is a credit-linked subsidy scheme (CLSS). The primary aim of PMAY is to construct more than 2 crore homes for Indian citizens who belong to a particular economic section. Here, under the credit-linked subsidy scheme (CLSS), the economically weaker sections (EWS) of society, the lower-income groups (LIG), and middle-income groups (MIG) would be able to access interest subsidies on the loans they borrow from banks or other fund houses to build their homes or to purchase a house.

Now, the Pradhan Mantri Awas Yojana (PMAY) housing scheme is further divided into two types, based on the area where the subsidy scheme is stretched out. These two types are namely the PMAY-U and PMAY-G.

  • PMAY-U:

PMAY-U is an abbreviation of Pradhan Mantri Awas Yojana- Urban. The urban scheme of the Pradhan Mantri Awas Yojana essentially encompasses about 4,300 cities and towns across India. This scheme comprises and accounts for various developmental authorities that are primarily in charge of planning across urban centres. These urban centres may include industrial development bodies, development authorities, among others.

  • PMAY-G:

PMAY-G is an abbreviation of Pradhan Mantri Awas Yojana Gramin. This credit-linked subsidy scheme comprises villages, slums, and other rural areas across India. This scheme is not limited to cities and towns. This PM Awas Yojana scheme was introduced to assist the families that fall under the economically weaker sections (EWS) and lower-income groups in accessing loans to build their homes.

The PM Awas Yojana Gramin has proved more efficient than the PM Awas Yojana urban scheme.

  • Attributes of the PM Awas Yojana:

The primary and chief intent behind the launch of the Pradhan Mantri Awas Yojana 2019 was to ensure affordable housing for all by the year 2022. In addition to this, some other benefits offered by the PM Awas Yojana scheme are listed below:

  • For understandable reasons, senior citizens prefer ground floor properties over others. By availing of this scheme, senior citizens can get government support on their claims concerning ground floor properties.
  • The PM Awas Yojana aims to assist women as well as individuals belonging to economically challenged sections of society. This includes the individuals belonging to Scheduled Tribe and Scheduled Castes. This scheme offers affordable housing to the people belonging to these groups.
  • You are required to register for this PM Awas Yojana scheme if you wish to enjoy the benefits that come with it.
  • The Pradhan Mantri Awas Yojana scheme has primarily mandated that women, be it, mothers or wives, to be named as the beneficiary while availing of this scheme.
  • This scheme also aims to support other minorities like the transgender group, widows, and other individuals belonging to minority and low-income groups of society.
  • How can you apply for the PMAY scheme?

To avail of the benefits offered by the Pradhan Mantri Awas Yojana scheme, you are required to apply and register for it. The steps you need to follow to apply for the PMAY scheme are listed below.

  • First, you need to visit the official government website of the Pradhan Mantri Awas Yojana scheme. (https://pmaymis.gov.in/)
  • On the website, you will find an option that says, 'Citizen Assessment' on the menu bar. You need to click on that option to proceed further.
  • Under this option, you need to select ‘Apply Online’.
  • Next, you need to select the scheme that you wish to apply for. In this case, you must select the ‘Credit-linked Subsidy Scheme (CLSS)’.
  • Now, you will be asked to enter your Aadhaar number.
  • After submission of your Aadhaar number, you will be automatically redirected to the application page.
  • Here, you are required to fill in all the necessary details which include your identification details, bank details among other information.
  • After checking all the details that you have entered, you need to click on the ‘Save’ option.
  • After saving your details, you will be provided with a unique application number.
  • Next, you should download the application form that you have just filled.
  • Lastly, you can print out a hard copy of this form and submit it at your nearest CSC office or at a bank or fund house that offers the PMAY

Frequently Asked Questions (FAQs):

1) Is there a maximum tenure period of the PMAY scheme?

Yes. The maximum tenure of the PMAY scheme is 20 years.

2) Where should I apply for PMAY?

You can avail of the services of the PMAY scheme by applying online. You could also visit a fund house or bank that offers the PMAY scheme to apply for it.

3) Is collateral compulsory for a home loan?

Yes. A home loan is a secured loan, which is why it requires you to set aside collateral which would ensure the timely repayments of your loan.


To purchase your own house or land on which you wish to construct your home is a huge decision and a matter of responsibility for every individual. Pursuing a home loan is a convenient option for all who wish to own a house.

For economically backward sections of society, owning a home becomes expensive and unaffordable because of the rising prices of properties in India. Therefore, the Pradhan Mantri Awas Yojana (PMAY) scheme assists these sections of society in their dreams of owning homes by launching reasonable and sustainable housing schemes.

Also read : SBI Home Loan Repo Rate | SBI RLLR
PMAY – Pradhan Mantri Awas Yojana: Things You Should Know About