Published on: Jun 15, 2018 @ 11:43
The Government on Tuesday has increased the carpet area of houses eligible for interest subsidy under the Prime Minister Awas Yojana – Urban (PMAY-U) for the Middle-Income Group by 33 per cent. With a goal of Housing for All by 2022, the decision to increase carpet area for MIG is another big step to boost the urban housing sector.
The carpet area of a house has been revised by the Housing and Urban Affairs Ministry. Now it has been enhanced to 160 square meters (1722 sq ft) from existing 120 square meters for Middle-Income Groups-I (MIG-I), while the same has been increased to 200 square meters (2153 sq ft) from existing 150 square meters for Middle-Income Group-II (MIG-II).
The interest subsidy under PMAY is available in different categories for first-time home buyers. Individuals with annual household income between Rs 6 lakh and Rs 12 lakh have been put under MIG-I category, while those earning between Rs 12 lakh and Rs 18 lakh fall under MIG-II segment.
The government provides 4 percent interest subsidy on a loan up to Rs 9 lakh for MIG-I home buyers and 3 percent interest subsidy on a loan up to Rs 12 lakh for MIG-II home buyers for a maximum loan tenure of 20 years. Loan amount beyond this limit will be at non-subsidized rates.
As per the scheme, if your annual income is up to Rs 18 lakh, you can avail the benefit of Rs 2.3 lakh upfront interest subsidy for a house measuring up to 2153 square feet. This means, if your annual income is between Rs 12 to Rs 18 lakh per annum, you can now buy a house measuring up to 2,153 sq ft for being eligible for Rs 2.3 lakh interest subsidy under the PMAY-U scheme. Similarly, if you are earning between Rs 6 to 2 lakh per annum, you can buy a house up to 1,722 sq ft or 160 sq metres for being eligible for interest subsidy of Rs 2.35 lakh under the scheme.
This is for the second time the government has revised the scheme for MIG to avail interest subsidy. The scope of the Credit Linked Subsidy Scheme (CLSS) was expanded to MIG category with the approval of the cabinet in February 2017. This scheme initially approved for implementation for the year 2017 has been extended up to March 2019.
Timing of this decision to increase carpet area eligibility norms is in sync with the recent RBI’s decision to revise the housing loan limits for Priority Sector Lending (PSL) eligibility. RBI in its last week’s policy increased the housing loan limits for PSL eligibility from existing Rs 28 lakh to Rs 35 lakh in metropolitan centers and from Rs 20 lakh to Rs 25 lakh in other centers provided the overall cost of the dwelling unit in the metropolitan and at non-metro areas does not exceed Rs 45 lakh and Rs 30 lakh respectively.
These enhancements will now enable more MIG customers to qualify for subsidy and avail the benefits provided under the scheme. Moreover, this is another step in the direction of expanding the beneficiary base for government schemes to promote the housing sector in the urban cities as well as small towns where housing cost is less compared to large metro cities.
Apart from increasing the number of beneficiaries, the enhancement in carpet area will increase the construction activity and will give a push to the housing sector in the country. So, this is a good move that will attract more beneficiaries under its fold and help to achieve the target of ‘Housing for All’ by 2022.

Ajay Verma is a founder and writer of The Housing World, a real estate and mortgage news website. He brings with him 20+ years of rich experience in the real estate and mortgage industries. He has worked in senior roles in Delhi and NCR in the above-mentioned sectors.