The central government has revised the operational guidelines for the Pradhan Mantri Awas Yojana-Urban (PMAY-U 2.0), introducing new rules for interest subsidies on urban housing loans. According to the Operational Guidelines of PMAY-U 2.0 released by the Ministry of Housing and Urban Affairs (MoHUA), the updated scheme aims to support one crore urban poor and middle-class families in purchasing or constructing houses by 2029. The initiative seeks to improve urban living standards and expand access to affordable housing.
What is the new Interest Subsidy Scheme?
Under the Interest Subsidy Scheme (ISS), eligible beneficiaries can avail a 4% interest subsidy on housing loans up to Rs 8 lakh, with a loan tenure of up to 12 years for subsidy calculation. The maximum home loan amount is Rs 25 lakh, while the house cost should not exceed Rs 35 lakh. The government has fixed the subsidy benefit at Rs 1.80 lakh, which will be transferred directly into the beneficiary's loan account. This scheme is expected to primarily benefit lower and middle-income families struggling with rising property prices and expensive home loans in urban areas.
Who can apply?
The scheme classifies beneficiaries into three income groups: Economically Weaker Sections (EWS) with annual income up to Rs 3 lakh, Low Income Group (LIG) with annual income between Rs 3 lakh and Rs 6 lakh, and Middle Income Group (MIG) with annual income between Rs 6 lakh and Rs 9 lakh. Applicants must not own a pucca house anywhere in India; if any family member owns one, the application becomes invalid.
Women-led ownership
PMAY-U 2.0 emphasizes women's empowerment and strengthens property rights. The guidelines state that houses should preferably be registered under the female head's name or jointly owned with the husband. This step aims to improve female ownership and financial security in urban households across India.
The four verticals
Apart from the Interest Subsidy Scheme, PMAY-U 2.0 operates through three additional verticals:
- Beneficiary Led Construction (BLC): The government provides Rs 2.5 lakh per house for beneficiaries to build a new house or expand an existing kutcha or semi-pucca house.
- Affordable Housing in Partnership (AHP): This vertical targets large housing projects by government agencies, housing boards, development authorities, and private builders. Eligible buyers receive subsidy support. Additionally, builders using eco-friendly construction, innovative housing technology, or disaster-resistant designs receive extra financial incentives.
- Affordable Rental Housing (ARH): A major addition in PMAY-U 2.0, ARH operates on two models. Model 1 converts unused government houses into rental housing, while Model 2 involves private or public companies building housing projects. ARH primarily targets migrants, workers, and the urban poor requiring affordable rental accommodations.
Digital tracking and direct transfers
The updated guidelines emphasize transparency and monitoring. Geo-tagging of houses (including GPS location and photos), online tracking systems, and Direct Benefit Transfer (direct transfer of funds to beneficiaries' bank accounts) have been made mandatory.
