Affordable Housing Scheme in India 2025: Key Schemes and Benefits

We, as a society, are aiming toward economic progress and a better standard of living. However, some sections of our society are not even economically stable enough to afford permanent housing. Their reality and living conditions make us re-evaluate where we went wrong as a society. This is why, from time to time, our government introduces schemes to uplift the economically weaker sections of our society.

Affordable housing in India has made it possible for people from all economic backgrounds to access safe and cheap living conditions. The government is encouraging home ownership to improve the living conditions of Indian citizens without ‘pucca’ (all-weather dwelling unit) houses.

What is Affordable Housing?

Affordable housing refers to homes that are reasonably priced for households with low median income. It aims to offer all basic amenities and facilities with quality and lasting construction but at a price point that is budget-friendly for aspiring homebuyers.

The issue of lower disposable income is being addressed through subsidies and incentives on raw materials, EMIs, etc. Affordable housing is not just about shelter; it contributes to sustainable development, economic growth, and the overall upliftment of society. Housing generates income, employment, and promotes better health and hygiene. 

What is Affordable Housing as per RBI?

According to the revised RBI guidelines, affordable house rates should not exceed Rs. 63 lakh in metro cities with a carpet area of up to 60 sqm and Rs. 50 lakh in non-metros with a carpet area of up to 90 sqm.

Who is Eligible for the Affordable Housing Scheme in India?

To qualify for affordable housing schemes, applicants must provide identity and income proof, address verification, bank statements, and property papers. The following income groups are eligible to apply:

1. Economically Weaker Section (EWS): Families with an annual income of up to Rs. 3 lakh qualify for housing units with a carpet area of 30 sqm, extending up to a maximum of 45 sqm.

2. Low-Income Group (LIG): Households earning between Rs. 3-6 lakh annually are eligible for units with a carpet area of 60 sqm.

3. Middle-Income Group I (MIG-I): Households with an annual income between Rs. 6-12 lakh can access units with a carpet area of 160 sqm.

4. Middle-Income Group II (MIG-II): Households with an annual income between Rs. 12-18 lakh are eligible for units with a carpet area of 200 sqm.

Affordable Housing Schemes by the Indian Government

The major schemes implemented by the central government include:

Pradhan Mantri Awas Yojana (PMAY)

PMAY(Urban): The PMAY-U scheme offers interest subsidies on home loans for first-time urban home buyers. Launched on 25th June 2015, it aims to provide all-weather pucca houses to all eligible urban households across the nation with the vision of ‘Housing for All.’

You can apply for PMAY benefits via its official portal or designated banks. To qualify, the property must be registered in your name, and EMIs must be paid regularly. A total of 118.64 lakh houses have been sanctioned under PMAY, with 112.74 lakh construction projects started and 91.5 lakh houses completed.

Additionally, you can explore its sub-schemes:

       •  Credit Linked Subsidy Scheme (CLSS)
       •  Affordable Rental Housing Complexes (ARHC)

PMAY(Gramin): This scheme provides financial assistance to homeless families by offering pucca houses, with costs shared by the state government. Earlier, it was known as the Indira Awas Yojana scheme.

PMAY-Urban 2.0

The second phase of the Pradhan Mantri Awas Yojana 2.0 started in September 2024 and will facilitate many upcoming affordable housing projects. It will address housing requirements in urban areas through the following verticals:

1. Beneficiary Led Construction (BLC): Eligible people from the EWS category can apply for fixed financial assistance from the central government to construct new houses or renovate existing ones under specific guidelines. Additional assistance may be provided by state/UT governments.

2. Affordable Housing in Partnership (AHP): A collaboration between the government and private developers, where a certain percentage of houses are reserved for EWS. Carpet area, pricing, and financial assistance are predetermined.

3. Affordable Rental Housing (ARH): Existing vacant government houses are converted, or newly developed houses are provided to migrant workers.

4. Credit Linked Subsidy Scheme (CLSS): A subsidy of 9% Net Present Value (NPV) over a loan tenure of 20 years or less is provided to eligible individuals from EWS and MIG sections.

Rajiv Awas Yojana

This scheme aimed at formalizing illegal housing and constructions to work towards a slum-free society.

There are several other state-level schemes as well, including:

       •  Delhi Development Authority (DDA) Housing Scheme – Delhi
       •  Maharashtra Housing and Area Development Authority (MHADA) Lottery Scheme – Maharashtra
       •  Tamil Nadu Housing Board Scheme – Tamil Nadu
       •  NTR Housing Scheme – Andhra Pradesh

Importance of Affordable Housing

Creates Job Opportunities

India is expected to face a shortage of 31.2 million affordable homes by 2030. This presents a huge market opportunity worth Rs. 67 trillion for developers and financial institutions. It also stimulates the local economy by creating jobs.

Economic and Social Stability

Affordable housing encourages economic self-dependency for weaker sections, increases consumer spending, and boosts tax revenue. It also enhances societal inclusivity by integrating economically disadvantaged groups into better living conditions.

Improved Living Standards

Providing stable housing reduces overcrowding and offers access to better healthcare, education, and safety, significantly improving the overall quality of life.

Women Empowerment and Ownership

With women struggling to make a living and climb the social ladder, affordable housing schemes play a crucial role in meeting their housing needs and encouraging homeownership.

Challenges of Affordable Housing Schemes

Despite their benefits, these schemes face several challenges:

1. Financial Literacy: Many eligible individuals are unaware of these schemes, causing them to miss out on opportunities.

2. Regulation and Approval Delays: The application process is lengthy and complicated, with approvals often delayed or rejected.

3. Financing Issues: The high costs of land, raw materials, and labor make the projects less profitable for developers. Government delays in providing incentives and subsidies further extend costs.

4. Land Availability: Limited land in cities drives up costs, forcing affordable housing projects to be set up in less connected areas.

5. Quality Concerns: Due to budget constraints, poor planning, and corruption, these houses often lack basic facilities and become unlivable.

Conclusion

India's housing shortage stands at 10.1 million, and this number is expected to grow. Affordable housing schemes aim to bridge this gap, ensuring that those in need receive access to dignified living conditions. However, the implementation of these schemes is slow and often inadequate. With continued efforts from policymakers, developers, and communities, the vision of sustainable urban living will become a reality.