The Pradhan Mantri Awas Yojana (PMAY) aims at providing affordable housing facilities to citizens across the country. Under this ‘Housing for All’ initiative, the Government intends to construct 20 million houses to cater to the housing needs of the financially weaker segment of the nation.
The Government has also introduced the Credit Linked Subsidy Scheme (CLSS) to provide subsidy on home loan interest rate to the eligible beneficiaries of the PMAY. People belonging to the Economical Weaker Section (EWS), Lower Income Group (LIG), and Middle-Income Group (MIG) can benefit from the Credit Linked Subsidy Scheme
The table below reflects the income bracket for each group, interest rate subsidy, and maximum loan amount that can be availed.
| Category | EWS | LIG | MIG-1 | MIG-2 |
| Annual income | Rs 3 Lakhs | Between Rs 3 Lakhs and Rs 6 Lakhs | Between Rs 6 Lakhs and Rs 12 Lakhs | Between Rs 12 Lakhs and Rs 18 Lakhs |
| Interest rate subsidy | 6.50% | 6.50% | 4% | 3% |
| Maximum loan amount | Rs 6 Lakhs | Rs 6 Lakhs | Rs 9 Lakhs | Rs 12 Lakhs |
It is to be noted that the interest subsidy amount will not be the difference between the actual interest rate and subsided rate. Instead, the subsidy amount will be determined on the basis of the Net Present Value (NPV). The NPV of the loan subsidy is calculated depending on the tenure of the loan. The interest paid on each EMI largely influences the NPV.
You can make use of the online home loan EMI calculator to calculate the amount saved on your home loan. Let’s understand the same in detail:
How to Calculate the Money Saved Under PMAY?
As per a statement by Mr. Sriram Kalayanaraman, CEO of the National Housing Bank, the interest subsidy of 4% on a home loan of Rs 9 lakhs would reduce the EMI by Rs 2062 per month. Similarly, at 3% interest subsidy, the EMI for a loan of Rs 12 lakhs will reduce by Rs 2019 per month (assuming the loan tenure to be 20 years and normal housing loan interest rate to be 8.65 percent).
Let’s take the same example for calculating the amount saved under PMAY.
NPV Calculation for MIG-1
| Income | Up to 12 lakhs |
| Original loan amount(A) for 20 years (8.65%) | Rs 9 lakhs |
| EMI | Rs 7,896 |
| Total interest (20 years) | Rs 9,95,055 |
| NPV: After subsidy of 4% (B) | Rs 2,35,000 |
| Reduced Loan (A-B) for 20 years (8.65%) | Rs 6,65,000 |
| New EMI | Rs 5,834 |
| Total interest (20 years) | Rs 7,35,236 |
| EMI saved | Rs 2,062 |
| Interest saved | Rs 3,30,055 |
| Govt. Subsidy | Rs 2, 35,000 |
NPV Calculation for MIG-2
| Income | Up to 18 lakhs |
| Original loan amount(A) for 20 years (8.65%) | Rs 12 lakhs |
| EMI | Rs 10,528 |
| Total interest (20 years) | Rs 13,26,743 |
| NPV: After subsidy of 3% (B) | Rs 2,30,000 |
| Reduced Loan (A-B) for 20 years (8.65%) | Rs 9,70,000 |
| New EMI | Rs 8,509 |
| Total interest (20 years) | Rs 10,72,448 |
| EMI saved | Rs 2,019 |
| Interest saved | Rs 2,54,295 |
| Govt. Subsidy | Rs 2, 30,000 |
It is evident from the above two illustrations that PMAY applicants can save a considerable sum on their home loans. Therefore, if you satisfy the PMAY eligibility criteria, ensure to make the most of it while availing a home loan in India.
