Jun 15, 2023Home Ally

Mortgage Interest Rate Subsidies for Affordable Housing in India

by Godrej Properties Limited



Introduction to Mortgage Interest Rate Subsidies

Understanding Affordable Housing in India

Affordable housing refers to housing units priced within the budget of low and middle-income individuals or families. These units are designed to provide safe and affordable shelter. The demand for affordable housing in India is significant due to rapid urbanisation and the need to accommodate the growing population.

Government Initiatives for Mortgage Interest Rate Subsidies

The Indian government has implemented several schemes and initiatives to provide mortgage interest rate subsidies for affordable housing. Some prominent initiatives include:

Pradhan Mantri AWAS Yojana: Launched in 2015, the PMAY aims to provide affordable housing for all by 2022. Under PMAY, eligible beneficiaries can avail of credit-linked subsidies on home loans, reducing the interest burden and making homeownership more affordable.

Credit Linked Subsidy Scheme: CLSS is a component of PMAY that provides interest rate subsidies on home loans for specific income groups. The subsidy amount varies based on the income category, with lower-income groups receiving higher subsidies.

Benefits of Mortgage Interest Rate Subsidies

Enhanced Affordability: Mortgage interest rate subsidies significantly reduce the effective interest rate on home loans. This makes homeownership more affordable, allowing low and middle-income individuals and families to realise their dream of owning a home.

Increased Accessibility: Subsidies make it easier for individuals with limited financial resources to qualify for home loans. Lower interest rates reduce the overall loan burden, improving loan eligibility and increasing access to credit.

Reduction in EMI: Subsidised interest rates lead to a lower Equated Monthly Instalment (EMI) for borrowers. This reduction in monthly payments enhances the repayment capacity and financial stability of homeowners.

Promoting Economic Growth: Affordable housing initiatives and mortgage interest rate subsidies contribute to economic growth by stimulating the real estate sector, creating employment opportunities, and boosting related industries.

Eligibility and Application Process

Eligibility criteria for mortgage interest rate subsidies may vary depending on the specific government scheme. Generally, factors such as income levels, property size, and citizenship status are considered. Interested individuals can apply for these subsidies through designated financial institutions or banks participating in government schemes. It is advisable to check the eligibility requirements and documentation needed to apply for the subsidy.


Mortgage interest rate subsidies for affordable housing in India are instrumental in making homeownership a reality for low and middle-income individuals and families. Government initiatives like PMAY and CLSS have played a significant role in promoting affordable housing and reducing the financial burden associated with home loans. These subsidies enhance affordability, increase accessibility to credit, and have a positive impact on the overall economy. 

Frequently Asked Questions

1. Who is eligible for mortgage interest rate subsidies?

Ans: Eligibility criteria for mortgage interest rate subsidies vary based on the specific government scheme. 

2. Can I avail of a mortgage interest rate subsidy if I already have a home loan?

Ans: Mortgage interest rate subsidies are generally available to individuals who are purchasing their first home or do not currently have a home loan.

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