PMAY 2.0: Rapidly rising property prices and high interest rates continue to make home purchases difficult for ordinary people. A significant portion of salaries is spent on EMIs, which puts pressure on other necessities. First-time homebuyers, in particular, are particularly concerned about this financial burden. However, now the government and banks are jointly implementing measures that are making this dream more accessible than ever.
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New Options for First-Time Homebuyers
Experts in the housing sector believe that the current era is better than ever for first-time homebuyers. Options such as longer loan tenures, lower initial EMIs, and government subsidies are now available. These benefits not only make it easier to manage monthly expenses but also reduce the overall cost of the loan.
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Direct Subsidy on Home Loans with PMAY 2.0
Pradhan Mantri Awas Yojana 2.0 has emerged as a major relief for first-time homebuyers. Under this scheme, eligible individuals receive a maximum interest subsidy of ₹1.80 lakh on home loans up to ₹25 lakh. This amount is transferred to the loan account in annual installments over five years, not in one go. This reduces the loan principal and automatically reduces the EMI.
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Which income groups benefit from PMAY 2.0?
This scheme benefits families within a certain income limit. The annual income limit for the economically weaker section is set at ₹3 lakh. The low-income group includes families earning between ₹3 lakh and ₹6 lakh. The middle-income group includes those earning between ₹6 lakh and ₹9 lakh annually. All these groups can benefit from the scheme if they meet other necessary eligibility criteria.
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Tax exemptions reduce the total cost
Tax exemptions also play a key role in making home loans affordable. Under Section 24(b) of the Income Tax Act, a deduction of up to ₹2 lakh per year is available on home loan interest. Additionally, a deduction of up to ₹1.5 lakh can be claimed on principal repayment under Section 80C. Both these benefits significantly reduce the actual cost of the loan over time.
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New Flexible Schemes from Banks and HFCs
Banks and housing finance companies are also offering attractive schemes for first-time home buyers. Step-up home loans offer low initial EMIs, which increase as income increases. Loan tenures of 25 to 30 years are now readily available, reducing monthly payments. Some institutions are also offering lower interest rates for women.
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What is PMAY-U 2.0 and Why is it Special?
Pradhan Mantri Awas Yojana Urban 2.0 has been implemented to provide permanent housing to everyone in urban areas. This scheme will begin in April 2022 and will remain effective until December 2025. Under this scheme, financial assistance is provided for purchasing a home, building a new home, or improving an existing home. Interest relief is provided through the Credit-Linked Subsidy Scheme.
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Priority to Vulnerable Sections
PMAY-U 2.0 prioritizes vulnerable and special sections of society. This includes widows, single women, senior citizens, persons with disabilities, transgender people, Scheduled Castes, Scheduled Tribes, and minority communities. States have also been given flexibility in terms of house size and amenities as per their needs.
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How Much Government Assistance is Available
Central assistance of up to ₹2.50 lakh per house is available under Affordable Housing in Partnership and Beneficiary-Led Construction. The central and state government contributions vary depending on the region. Some states also provide additional financial assistance at their own level.
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How to Apply for PMAY-U 2.0
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Applying for this scheme can be done both online and offline. An online application is possible by visiting the pmaymis.gov.in portal. Applications can also be made through authorized banks and housing finance companies. Applications require an Aadhaar card, income certificate, proof of address, and a declaration that the applicant does not already own a permanent house. The deadline for applications is September 30, 2025.