PMAY-U 2.0: the home-loan interest subsidy, and who qualifies

Under PMAY-Urban 2.0's Interest Subsidy Scheme, a family earning up to ₹9 lakh a year can get up to ₹1.80 lakh credited to its home loan in five yearly instalments. The house must cost at most ₹35 lakh, the loan at most ₹25 lakh, and nobody in the family may own a pucca house anywhere in India.

What the scheme is, and how long it runs

PMAY-Urban 2.0 is the Centre's housing mission for urban families, launched in September 2024 and running for five years from 1 September 2024. Of its four parts, the one that touches a home loan is the Interest Subsidy Scheme, run through banks and housing-finance companies. Every figure below is as the official guidelines and portal state them in October 2026. Whether you receive anything is decided by your lender and the portal, so confirm each number with both before you count on it.

Step one: the whole household's income

The first test is the family's total annual income, not just the borrower's salary. It must fall in one of three bands.

All three bands get exactly the same terms. The band decides whether you are in, not how much you get. For this part of the scheme you declare the income yourself, by a self-certificate or an affidavit, and a false declaration can lead to legal proceedings.

Step two: the house, the loan, and the part that earns subsidy

The subsidy is 4 per cent a year on the first ₹8 lakh of the loan, for a tenure of up to 12 years, which works out to at most ₹1.80 lakh. The loan may be as large as ₹25 lakh, but anything above ₹8 lakh earns nothing extra. A smaller loan, or a shorter tenure, earns proportionately less.

Step three: the rule to read twice

Who "the family" is. Husband, wife, and their unmarried sons and daughters.

The test. None of them may own a pucca house, in their own name, anywhere in India. Pucca means a roof and walls of durable material (brick, stone, concrete, timber, metal or asbestos sheet), even if the floor is kutcha.

And one more. Nobody may have been allotted a house under any Central, State or local government housing scheme in the last 20 years.

You sign an undertaking that both are true.

Step four: what the loan is for

The loan must buy or build a home.

Building on your own plot counts; buying the bare plot does not. And a lock-in: the house may not be sold or transferred for five years from the first disbursement of the loan.

How the money arrives

It is not a cheque, and not all at once: five equal yearly instalments, so at most ₹36,000 a year, straight into the home-loan account, where it cuts the principal. From then on you pay EMI on the smaller principal that remains.

Each instalment has conditions. The loan must have been sanctioned and disbursed on or after 1 September 2024, with a tenure of more than five years. At each instalment the loan must be live, not in default, with more than half the principal still outstanding. The house is geo-tagged by the lender or by you, as the payment plan requires.

By the scheme's own arithmetic, ₹1.80 lakh paid over five years is worth at most ₹1.50 lakh in today's money, its net present value at 8.5 per cent. Use that figure, not ₹1.80 lakh, when you compare offers.

Step five: the file, and where it starts

The application starts on the PMAY-U 2.0 portal, under "Apply for PMAY-U 2.0": you register the demand and name your lender, and the application is forwarded to it. Have these ready:

• Aadhaar for every member of the family, or an Aadhaar Virtual ID, not just the borrower's.
• PAN and address proof, as your lender asks for them.
• The income declaration: a self-certificate or affidavit; some lenders also want an income certificate.
• The undertaking: no pucca house anywhere in India, and no housing-scheme benefit in 20 years.
• The property's approved plan: the layout or building plan your state's rules require.

The plan comes before the subsidy

The guidelines give the subsidy to borrowers who have submitted the approved layout plan to the lender, as the state's rules require. The plan need not be insisted on where a state allows deemed approval or a pre-approved building plan. Either way, the property is checked before the subsidy is, and you should check it first.

This guide promises nobody a subsidy; your lender and the portal decide.

Questions people ask

Who is eligible for PMAY-U 2.0 home loan subsidy?

Urban families with annual household income up to ₹9 lakh, where no member (husband, wife, unmarried children) owns a pucca house anywhere in India and none was allotted a government scheme house in the last 20 years.

How much subsidy will I get under PMAY-U 2.0?

At most ₹1.80 lakh: 4 per cent a year on the first ₹8 lakh of the loan for up to 12 years. A smaller loan or shorter tenure earns proportionately less.

Is PMAY subsidy available on a plot loan?

No. A loan for land alone is not covered. A loan to build a house, or to buy a house or flat, is.

How is the PMAY-U 2.0 subsidy paid?

In five equal yearly instalments credited to your home-loan account, reducing the principal, while the loan is live and more than half the principal is still outstanding.

Where the facts come from. The facts and figures in this post come from verified government sources and verified RERA-registered brokers.

Indori Zameen is a private platform. It is not a government body and is not affiliated with one — always confirm a record with the concerned authority before you commit money.