Home Loan

Indian residents availing housing loans to buy property or land are eligible for a lucrative subsidy from the government under the PMAY or Pradhan Mantri Awas Yojana Scheme. PMAY scheme is a part of “housing for all” social welfare programme that was launched by the government in 2015. 

It is available for the lower-income group (LIG), middle-income group (MIG1 and MIG2) and the economically weaker section (EWS). Individuals applying for home loan in any financial institutions will be able to get interest subsidies under the Credit Linked Subsidy Scheme of PMAY based on the credit amount.

In order to understand the amount of interest subsidy that home loan borrowers are eligible to get under PMAY, a home loan calculator is a viable option. These calculators will help an individual determine the monthly EMIs he/she will be required to pay against their loan amount and accordingly gauge the affordability.

How to use a home loan calculator

Individuals looking forward to applying for a home loan under PMAY must follow these 3 steps to instantaneously calculate their subsidy and EMIs using a home loan calculator, which is often known as PMAY eligibility calculator.

  • Step 1

First, enter the annual family income in the allocated field.

  • Step 2

Next, one has to enter the loan amount that they are planning to borrow.

  • Step 3

Following this, one will have to enter the tenor for which he/ she wants to borrow the loan. It can be selected in either months or years as provided in the calculator.

The capital amount, subsidy, subsidy category and the payable EMIs will be instantly displayed on screen. Individuals can alter selected tenor and borrowed loan amounts to re-check the subsidies and plan accordingly.

Amount of subsidy each income group can get

Along with calculating EMIs with a home loan calculator, it is also essential to learn the subsidy amount or percentage that individuals are eligible to receive as per their annual income under PMAY. 

The following PMAY list offers a brief overview of the maximum amount of subsidy that LIG, MIG1 and MIG 2 can get under this subsidy scheme and will help you make an informed decision.

  • Low-income group or (LIG) 

Individuals with annual income below Rs.6 lakh falls under low-income category. The LIG group can get a subsidy of about 6.5% or Rs.2.67 lakh.

  • Middle-income group 1 (MIG 1)

Middle-income group 1 consists of individuals who earn between Rs.6 lakh and Rs.12 lakh per annum. Home loan applicants who fall under the MIG 1 group are eligible to get a maximum of 4% subsidy, which is equivalent to Rs.2.3 Lakh

  • Middle-income group 2 (MIG 2)

Individuals who earn between Rs.12 lakh to Rs.18 lakh are categorised under middle-income group 2. These individuals can get a subsidy of up to 3% under the PMAY scheme.

Home loan applicants must also check their pre-approved offer, which is extended by several financial institutions for speedier approvals. This offer comes with a pre-approved credit limit and considerably reduces the hassle of the lengthy documentation process. Individuals can easily check the pre-approved offer from the website of their preferred lending institution by sharing some basic information like name and phone number. 

Apart from this, borrowers applying for a home loan under PMAY must also check the PMAY eligibility and documents required and other conditions stated by the government to avail of the subsidy.

Home loans with easy EMIs and tenor have always helped to lessen the financial burden for home buyers. The Pradhan Mantri Awas Yojana or PMAY scheme has further played a significant role in increasing the affordability of home loans for almost all sections of society. 

However, since a home loan is a long-term financial commitment, it is essential to use the home loan calculator to estimate the EMIs and subsidies and avail credit as per repayment capabilities.

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