Top 5 Affordable Housing Finance Schemes

India places a critical focus on providing affordable housing to all its citizens through government initiatives. High real estate prices may make it difficult for people to own their houses, but there are various finance arrangements that provide subsidies, lower interest rates, and flexible repayment terms so that people can afford homes.

Here are six notable affordable housing finance schemes in India:

1. Pradhan Mantri Awas Yojana - Gramin (PMAY-G)

Launched in 2016, PMAY-G aims to provide "Housing for All" in rural areas by 2028. The scheme offers financial assistance to construct pucca (permanent) houses for the rural poor.

Key Features:

• Financial Assistance: Eligible beneficiaries receive INR 1,20,000 for constructing houses on flat land and INR 1,30,000 in hilly areas.
• Target: Construction of 2.95 crore houses by 2028.
• Beneficiaries: Identified through the Socio-Economic and Caste Census (SECC) 2011 data and verified by Gram Sabhas.

This scheme ensures that the rural population has access to affordable housing loans to build durable homes.

2. Pradhan Mantri Awas Yojana - Urban (PMAY-U)

PMAY-U focuses on providing affordable housing in urban areas. The scheme has been extended to achieve its goal of "Housing for All" by 2028.

Key Features:

• Subsidy: Interest subsidy up to 6.5% on housing loans for eligible beneficiaries.
• Beneficiary Categories: Economically Weaker Sections (EWS), Low-Income Groups (LIG), and Middle-Income Groups (MIG).
• Implementation: Through various verticals, including in-situ slum redevelopment, affordable housing in partnership, and beneficiary-led individual house construction.

This affordable housing scheme aims to address the housing shortage in urban areas by providing affordable homes to eligible beneficiaries.

3. Housing and Urban Development Corporation (HUDCO) Loans

Housing and Urban Development Corporation loan offers financing for housing and urban infrastructure projects, promoting affordable housing across India.

Key Features:

• Project Financing: Provides loans for residential infrastructure development.
• Individual Home Loans: Offers affordable housing loans to individuals for constructing or purchasing homes.
• Interest Rates: Competitive rates with flexible repayment options.

HUDCO plays a significant role in facilitating access to affordable housing finance for both developers and individual borrowers.

4. State-Specific Housing Schemes

Several states have launched their own affordable housing schemes to cater to local needs.

Examples:

• Maharashtra Housing and Area Development Authority (MHADA): Offers affordable homes through a lottery system to various income groups.
• Delhi Development Authority (DDA) Housing Scheme: Provides affordable housing options in the capital, often linked with central schemes like PMAY-U.
• Tamil Nadu Housing Board (TNHB): Develops and allocates affordable homes to different income categories.

These state-specific schemes complement central initiatives, ensuring wider reach and customization to regional housing needs.

5. National Housing Bank (NHB) Subsidy Schemes

NHB offers refinancing to lenders to promote affordable housing finance.

Key Features:

• Refinancing: Provides funds to housing finance companies and banks to extend affordable housing loans to individuals.
• Subsidy Support: Implements interest subsidy schemes to reduce the cost of borrowing for homebuyers.
• NHB's initiatives ensure that lenders have adequate funds to support affordable housing loans, thereby benefiting end-users.

These measures enhance the affordability of housing by reducing the financial burden on homebuyers.

Also Read: Effective Strategies for Paying Off Your Home Loan Sooner

Affordable Home Loan by Godrej Housing Finance

Godrej Housing Finance (GHF), a subsidiary of Godrej Capital, offers various financial solutions to help individuals purchase or construct affordable homes. With competitive interest rates and flexible repayment options, GHF aims to make homeownership accessible for a wide range of borrowers.

Key Features:

• Loan Amount: Ranges from INR 5 lakh to up to INR 1 crore for purchasing or constructing a home.
• Interest Rates: Starting from 8.55% per annum, making Home Loans more affordable.
• Loan Tenure: Flexible repayment periods of up to 30 years, ensuring manageable EMIs.
• Loan-to-Value Ratio: Financing up to 90% of the property’s value, reducing the initial financial burden.

GHF's affordable housing finance solutions align with government initiatives like Pradhan Mantri Awas Yojana - Urban (PMAY-U) and Credit Linked Subsidy Scheme (CLSS) Home Loan, allowing eligible borrowers to avail interest subsidies.

Also Read: Home Loan: All You Need to Know – Godrej Capital

The Bottom Line

Owning a home is a cherished dream for many in India. The government's affordable housing schemes and financial measures aim to make this dream a reality by providing affordable housing loans, subsidies, and supportive policies. Whether in urban or rural areas, these initiatives strive to ensure that every citizen has access to affordable homes.

If you want affordable housing, apply for a Home Loan to make your dream home a reality. With such low-interest financing options, a Home Loan can help you buy, build, or renovate a house without excessive financial strain.

Moreover, if you want to calculate your monthly EMIs accurately without putting in a lot of mental labour, use an online EMI calculator.

FAQs

Q.1. What is affordable housing finance?

A. An affordable housing loan is a financial solution that helps individuals, especially those in low and middle-income groups, buy a home without financial stress. It provides the necessary funds to purchase a property while ensuring manageable repayments.

Q.2. What is housing finance scheme?

A. Housing finance helps individuals buy or improve a home by providing loans with manageable repayments over time.

Q.3. What is the limit of affordable housing?

A. Currently, there is a monetary cap for affordable housing of INR 45 lakh and the real estate sector is pressing to push the cap to INR 75-100 lakh, considering rising construction costs and inflation.

Q.4. What is an affordable housing scheme in India?

A. In line with its objective of 'housing for all', the Government of India had launched an affordable housing scheme under the Pradhan Mantri Awas Yojana (PMAY) to help people with low income buy a home.

Q.5. Which is largest housing scheme in India?

A. Pradhan Mantri Awas Yojana (PMAY) is the largest housing scheme in India, especially for the Economically Weaker Sections (EWS) and low-income groups.

Disclaimer:

The contents of this article are for information purposes only and not a financial advisory. The information is subject to update, revision, and amendment and may change materially. The information is not intended for distribution or use by any person in any jurisdiction where such distribution or use would be contrary to law or regulation or would subject Godrej Capital or its Affiliates to any requirements. Godrej Capital or its Affiliates shall not be responsible for any direct/indirect loss or liability incurred by the reader for making any decisions, financial or otherwise based on the contents and information mentioned. For more information, please visit www.godrejcapital.com.