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.

What is an Affordable Housing Scheme?

An affordable housing scheme is a government-backed or private initiative designed to make housing more accessible to low and middle-income groups. These schemes aim to support first-time homebuyers, especially those from EWS, LIG, and sometimes MIG segments, by offering reduced home prices, lower interest rates, and interest subsidies under various housing loan schemes in India.

Why Government Housing Schemes Matter in 2025

With rising real estate costs and affordability challenges in urban India, govt housing schemes play a critical role in supporting underserved communities. Programs like home loan subsidy 2025 under PMAY make first-time homeownership more achievable, driving financial inclusion and addressing the housing gap for low and middle-income groups.

Top 5 Affordable Housing Loan Schemes in India

Explore five notable affordable housing loan schemes in India, backed by the government. These popular housing schemes in India cater to various income groups and regions, offering unique benefits like interest subsidies, lower EMIs, and direct housing allotments.

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.

Also Read: 5 PMAY Benefits for Women Buying Homes in 2025

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

Key Features of Affordable Housing Schemes:

Affordable housing schemes are designed to make homeownership more accessible for low- to middle-income groups. These housing loan schemes in India offer financial assistance, targeted subsidies, and encourage private participation to boost accessibility and affordability in housing.

Key Features:

• Targeted Beneficiaries: Primarily focused on EWS, LIG, and MIG segments, including first-time homebuyers.
• Financial Assistance: Includes interest subsidies, reduced EMIs, and extended repayment tenures to ease the financial burden.
• Incentives for Developers: Schemes often offer tax benefits and regulatory relaxations to developers to build affordable housing units.
• Accessibility and Affordability: Homes are provided in both urban and semi-urban areas at reduced costs with easier financing options.

How to Apply for These Home Loan Schemes

Applying for a home loan scheme is now simpler with digital platforms and local assistance. Whether you’re seeking home loan subsidy in 2025 or applying under a government initiative, following the correct steps can ensure a hassle-free experience.

Two Ways to Apply:

1. Online Portals:

Visit official websites like PMAY – pmaymis.gov.in or respective state housing portals. Use the eligibility calculator, fill out the application form, upload required documents (Aadhaar, income proof, etc.), and track your status online.

2. Local Authorities:

Approach authorized banks, housing finance companies, or local housing authorities that facilitate affordable housing schemes. They assist with offline applications, document collection, and verification processes.

General Steps to Apply:

• Check Eligibility: Use online calculators or consult with lenders to see if you qualify for the scheme.
• Gather Documents: Keep your ID, address proof, income proof, and property details ready.
• Apply Online or Offline: Submit your application through the portal or local branch.
• Verification Process: The authority/lender will verify documents and eligibility.
• Approval & Subsidy Credit: Once approved, your subsidy or benefit is processed and credited.

Godrej Capital’s Role in Affordable 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 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 Home Loan 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.