Pradhan Mantri Awas Yojana (Urban) [PMAY (U)] is a flagship scheme of the Government of India aimed at providing affordable housing to Urban India. The scheme aims to meet the housing requirements of the underprivileged sections of society, in particular the economically weaker sections (EWS) and lower income groups (LIG), who often faced financial limitations in acquiring housing.
The scheme also promotes women empowerment by giving preference to female ownership of property under the scheme.
Current Interest Rate
As on 2025, PMAY (Urban) interest subsidy is 4% per annum on the first ₹8 lakh of the loan amount for eligible beneficiaries (EWS, LIG, MIG), with ₹1.80 lakh maximum interest and NPV not to exceed ₹1.50 lakh turning at an 8.5% interest rate. The maximum loan amount is ₹25 lakh, house limit ₹35k, with a maximum carpet area of 120 sq. m.
PMAY (Urban) Example
Suppose a borrower is sanctioned a home loan of ₹10 lakh under PMAY-U:
- On the first ₹8 lakh, an interest subsidy of 4% p.a. applies.
- For a 20-year loan, the total interest subsidy could reach ₹1.80 lakh, credited upfront to reduce principal and thus lower the EMI.
- For example, with a standard interest rate of 8.5%, the subsidy might result in an effective rate closer to 4.5% for the eligible loan portion, generating significant savings over the tenure.
Subsidy=8,00,000×4%×20=₹1,60,000
Subsidy=8,00,000×4%×20=₹1,60,000
The actual amount received depends on NPV calculations, loan tenure, and eligible subsidy limits.
How to Apply for PMAY (Urban)
You have the option to apply for PMAY (Urban) – offline or online.
Application Procedure – Online
To apply online for PMAY (Urban):
Step 1: Go to the official PMAY website.
Step 2: Click on “Apply for PMAY-U 2.0”.
Step 3: Find the ‘Citizen Assessment’ tab and select the “Benefit under 3 components” category.
Step 4: Complete the eligibility assessment by filling in a few basic details, including the Aadhaar number
Step 5: Complete a detailed application form with details about your income, property, and personal details.
Step 6: Once the application form is completed, submit it and take note of the application number that is generated, as you will need it to track your application status.
Application Procedure – Offline
Step 1: Go to your nearest Common Service Centre (CSC) or the designated branch of that bank
Step 2: In your designated bank or CSC, collect the PMAY application form; fill it ( mention all personal and property information).
Step 3: Pay a standard application fee of ₹ 25 (excluding GST)
(Note: When you do this, some banks have the policy of giving the fee back to you in the form of a fee waiver on the loan charge).
Step 4: Submit your application form and required documents (Including: ID, address, proof of income, property papers) to the authorized official.
Step 5: Ask the official for a receipt from the BF, so you know they have received your application and have a way to track your application status.
Benefits and Tax Benefits:
- Beneficiaries can receive an interest subsidy of up to ₹1.80 lakh, which reduces the total repayment amount on their loan.
- The monthly EMI becomes lower because the subsidy reduces the effective principal amount.
- Borrowers are eligible for tax benefits, as the principal repayment qualifies for deduction under Section 80C, and the interest repayment qualifies for deduction under Section 24(b) of the Income Tax Act.
- The scheme helps in maximizing savings, since beneficiaries save on fees, principal repayment, and interest subsidy together.
- PMAY (Urban) contributes to urban development by encouraging the construction of affordable housing and improving living standards.
- The scheme promotes financial inclusion, as it provides easier access to formal credit for economically weaker and low-income families.
Conclusion
PMAY (Urban) has significantly reduced India’s urban housing shortfall by providing millions with affordable, good-quality homes. Beyond housing, it has improved living standards and socioeconomic conditions. Challenges remain, particularly in timely project completion and slum coverage, yet the scheme remains a vital tool for inclusive urban development and better quality of life for disadvantaged urban populations.
Frequently Asked Questions (FAQ)
Beneficiaries can claim deductions for principal and interest payments on their home loans under 80C and 24(b) of the Income Tax Act, in addition to the benefits offered by the subsidy.
Yes, the PMAY-U scheme aims to ensure that the female head of the household is the owner or co-owner of the house. This also allows for women’s empowerment.
The beneficiary may be required to pay back the subsidy they received from PMAY if they sell the house and they have not owned it for 5 years.
Disclaimer:
The information provided about Pradhan Mantri Awas Yojana (Urban) is for general awareness only. Actual eligibility, subsidy amounts, and benefits may vary depending on government guidelines and lending institutions. Readers are advised to verify details with official PMAY portals or consult their bank/financial advisor before making any decisions.
