A subsidised or concessional home loan is one where the effective interest rate is lower than the market rate — either through a government scheme (like PMAY Credit Linked Subsidy Scheme), an employer benefit, or a special lender offer. By comparing the subsidised rate against the prevailing market rate, you can instantly see how much you save on monthly EMI and over the full tenure of the loan.
PMAY Credit Linked Subsidy Scheme (CLSS)
Under PMAY-CLSS, eligible home buyers in the EWS, LIG, and MIG categories receive an upfront interest subsidy on their home loan principal. MIG-I: 4% subsidy on ₹9 lakh principal for 20 years. MIG-II: 3% subsidy on ₹12 lakh principal for 20 years. The subsidy is credited upfront to your loan account, reducing the outstanding principal — effectively lowering your EMI from day one. Use this calculator to compare your net EMI after the subsidy vs a standard market-rate loan.
Employer-Assisted Home Loans
Many large organisations and PSUs offer employees subsidised home loans at rates significantly below market (e.g., 5–6.5% vs market 8.5–9%). This is a huge benefit — the difference in total interest over a ₹50 lakh, 20-year loan between 6% and 8.5% is approximately ₹26 lakh. If your employer offers this benefit, always exercise it before taking a market-rate loan.
Frequently Asked Questions
Who is eligible for PMAY home loan subsidy?
EWS (annual income < ₹3 lakh), LIG (₹3–6 lakh), MIG-I (₹6–12 lakh), and MIG-II (₹12–18 lakh) categories. First-time home buyers who do not own a pucca house anywhere in India. The property must be in the applicant's or spouse's name, and the loan must be from a registered financial institution.
How is the interest subsidy under PMAY calculated?
The subsidy is calculated as the net present value (NPV) of the interest differential between the market rate and the subsidised rate on the eligible principal amount, discounted at 9%. This NPV is credited upfront to reduce your outstanding loan, thereby reducing your EMI or tenure.