Aug 02, 2023

Affordable Housing Fund | Low-Cost Homes

by Godrej Properties Limited



The desire to own a home is shared by everyone, yet for millions of people worldwide; it remains a distant dream. There is an urgent demand for affordable housing alternatives because of the widening disparity between housing costs and people's earnings. Governments and private organisations have joined forces to establish the Affordable Housing Fund in response to this pressing issue. The concept and its role in addressing housing issues and promoting sustainable communities are discussed below.

Definition of Affordable Housing Fund

An Affordable Housing Fund is a financial tool that is specifically designed to support individuals and families with limited income for the development of affordable housing options. It was established as a distinct fund under the National Housing Bank (NHB) during the 2018 budget. 

If banks and financial institutions do not meet their lending targets, they must contribute the deficit to the Affordable Housing Fund. Additionally, funds raised from the issuance of government-authorized bonds in the market are also allocated to this fund.

Importance and Purpose of Affordable Housing

The purpose of the Affordable Housing Fund is fourfold: firstly, to alleviate funding shortages for infrastructure projects in India; secondly, to facilitate and accelerate the development of infrastructure in the country; thirdly, to contribute to the ambitious goal of achieving 'Housing for All by 2022'; and fourthly, to address and bridge the priority sector lending shortfall by encouraging investment in low-cost housing initiatives.

Global Housing Challenges

The lack of affordable housing is a widespread challenge affecting developing and developed nations. Rapid urbanisation, population growth, and income disparities have aggravated the problem. The shortage of affordable homes has led to issues like housing insecurity, missed educational opportunities, and lesser economic prospects. Not to mention this has also resulted in adverse effects on individuals' mental and physical health. 

The Affordable Housing Fund represents a comprehensive approach to addressing these issues. This is done by providing social housing, government housing, and public housing options, which give the people a ray of hope to millions of people struggling to find stable and decent housing options.

Housing Finance and Affordability

Housing finance plays a vital role in determining the affordability of homes. Traditional mortgage systems may not be accessible to low-income individuals due to stringent eligibility criteria and high down payment requirements. However, the Affordable Housing Fund seeks to overcome these barriers by providing subsidies, low-interest loans, and down payment assistance, making homeownership a realistic goal for the financially constrained.

Public-Private Partnerships in Affordable Housing

The success of Affordable Housing Funds often hinges on robust public-private partnerships. Government agencies bring regulatory support, land resources, and policy initiatives, while private entities contribute financial expertise, innovation, and execution capabilities. Collaborating with the private sector enables efficient project implementation, leveraging the strengths of each partner for maximum impact.

Public-private home investment partnership programs foster innovation in housing design and construction, ensuring affordable homes are built sustainably, with attention to environmental and social factors.


Affordable Housing Funds represent a beacon of hope in the quest to address global housing challenges. By supporting the creation of affordable housing options, these funds empower communities, foster economic growth, and contribute to a more equitable society. Through this, the dream of affordable homeownership can become a reality for many.


1. Is it good to invest in affordable housing?

Investing in affordable homes can be a socially beneficial option, providing cost-effective accommodation options for those in need while also possibly offering profits.

2. What is the concept of affordable housing?

Affordable housing aims to provide safe, decent, and reasonably priced homes to low and middle-income individuals, reducing the housing affordability gap and promoting inclusive communities.

3. Who is eligible for the affordable housing scheme in India?

Applicants falling under Middle Income Group-I (MIG – I) should have an annual household income between Rs 6 lakh and Rs 12 lakh, while those in Middle Income Group-II (MIG – II) should have an income between Rs 12 lakh and Rs 18 lakh. Eligible individuals can avail of a housing loan with an interest subsidy of up to Rs 9 lakh (MIG – I) and up to Rs 12 lakh (MIG – II) for a maximum tenure of 20 years. 

4. What is the affordable housing scheme in India?

In recent years, India has witnessed the implementation of various affordable housing schemes, a result of collaborative efforts between the Central Government and State Governments. These initiatives are tailored to simplify and make home-buying more affordable for individuals belonging to lower and middle-income groups. Some notable schemes include Pradhan Mantri Awas Yojana (Urban), Pradhan Mantri Gramin Awas Yojana, Rajiv Gandhi Awas Yojana Housing Scheme, and Delhi Development Authority Housing Scheme, among others.

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