Affordable Housing in India: Latest Government Schemes & Policy Updates

Introduction

The dream of owning a home is now more attainable than ever in India — thanks to the government’s push for affordable housing, evolving policies, and increasing access to home loans. With rising demand in Tier 2 and Tier 3 cities, developers and policymakers are now focused on delivering low-cost, quality housing options for middle and lower-income families.

In this comprehensive article, we’ll explore the latest affordable housing schemes, state initiatives, policy reforms, and the most recent home loan trends that are driving homeownership in India in 2025.

What is Affordable Housing?

Affordable housing refers to housing units that are affordable to a section of society whose income is below the median household income. In India, it broadly targets:

• EWS (Economically Weaker Sections) – Income up to ₹3 lakh

• LIG (Lower Income Group) – ₹3 to ₹6 lakh

• MIG (Middle Income Groups) – ₹6 to ₹18 lakh

According to the Ministry of Housing and Urban Affairs (MoHUA), homes up to ₹45 lakh with a carpet area of 60 sq.m. (metro) or 90 sq.m. (non-metro) fall under the affordable housing category.

Importance of Affordable Housing in India

Affordable housing is critical for:

• Bridging the urban-rural housing gap

• Empowering low-income families, women, and backward communities

• Reducing slums and promoting urban sanitation

• Generating employment in real estate and infrastructure sectors

• Promoting financial inclusion through credit access

Major Affordable Housing Schemes in 2025

1. Pradhan Mantri Awas Yojana – Urban & Gramin

Launched in 2015, PMAY continues to be the flagship program for affordable housing:

Key Features:

• Credit-linked subsidy up to ₹2.67 lakh on home loans

• Beneficiary-led construction, in-situ slum redevelopment, and affordable housing partnerships

• Target groups: EWS, LIG, and MIG families

2025 Updates:

• Extended till March 2026

• Digital tracking of applications via PMAY mobile app

• Push for eco-friendly and disaster-resilient homes under Light House Projects

Visit: https://pmaymis.gov.in

2. State-Specific Housing Schemes

Several state governments have introduced housing initiatives tailored to local needs:

a. Mukhyamantri Awas Yojana (Bihar)

• Target: Rural homeless & kutcha house dwellers

• Assistance: ₹1.20 to ₹1.50 lakh + funds for toilet construction

b. MHADA Schemes (Maharashtra)

• Flats offered via lottery to LIG/MIG categories

• Projects across Mumbai, Pune, Nagpur, and Nashik

c. Delhi Development Authority (DDA) Schemes

• Low-cost flats in outer zones

• Priority to SC/ST, women, and senior citizens

d. Tamil Nadu Housing Board (TNHB)

• Township-style affordable projects with modern amenities

• EMI-based payment plans for salaried groups

3. Light House Projects (LHPs)

These are technology-driven construction projects to provide affordable and quick-to-build homes. LHPs are currently running in:

• Lucknow, Rajkot, Ranchi, Indore, Chennai, and Agartala

• Focus on precast and 3D printing methods

• Integrated infrastructure and faster delivery timelines

4. Affordable Rental Housing Complexes (ARHCs)

Launched for migrant workers and the urban poor, ARHCs offer:

• Low monthly rents

• Developed under PPP models

• Maintenance by private operators

• Located in industrial hubs and peri-urban areas

Housing Loans for Affordable Housing in India

Access to home loans is a major enabler of affordable housing. Over the last five years, both public and private sector lenders have introduced specialized loan products tailored for EWS, LIG, and MIG segments.

Key Features of Home Loans for Affordable Housing

Credit Linked Subsidy Scheme (CLSS) – PMAY

The CLSS under PMAY helps reduce the interest burden through subsidy.

The subsidy is credited directly to the loan account, reducing the EMI.

Leading Banks & Housing Finance Companies

Some popular institutions offering affordable home loans include:

• State Bank of India (SBI)

• LIC Housing Finance

• HDFC Ltd

• Bank of Baroda

• PNB Housing

• Aavas Financiers

• Can Fin Homes

• Bajaj Housing Finance

Many of these lenders offer PMAY-linked loans with digital application and quick approvals.

Latest Policy Updates in 2025

1. GST Relief on Affordable Homes

• 1% GST on under-construction homes priced up to ₹45 lakh

• 5% for non-affordable housing (without input tax credit)

2. Land Reforms & Developer Incentives

• Relaxation in FAR/FSI norms

• Single-window clearance systems for approvals

• Subsidies for developers building EWS and LIG units

3. Women-Centric Housing Policies

• Stamp duty rebates in many states for female co-owners

• Preference in flat allotments under government schemes

• Dedicated units for widows, single mothers, and disabled women

4. Push for Green & Sustainable Housing

• Use of fly ash, solar panels, rainwater harvesting in new projects

• LHPs adopting green certification

• Developers encouraged to follow Eco-Niwas Samhita 2021 norms

Challenges Still Faced

Despite the progress, the journey is not without hurdles:

• Land availability in urban areas

• Delays in disbursal and approvals

• Limited awareness among rural beneficiaries

• Low private participation in rental housing projects

• Informal income groups struggling with documentation

Conclusion

Affordable housing in India is not just a policy objective — it’s a movement towards inclusive growth and economic empowerment. With schemes like PMAY, state housing boards, rental housing complexes, and evolving home loan facilities, the Indian government is creating pathways for millions of families to achieve homeownership.

If you’re planning to buy your first home in 2025, now is the best time to:

• Explore government-backed schemes

• Compare interest rates on housing loans

• Apply for PMAY-linked home loan subsidies

Useful Links:

• PMAY Official Portal: https://pmaymis.gov.in

• MoHUA Website: https://mohua.gov.in

• State Housing Boards: [Check your respective state government portals]

• Housing Loan Eligibility: [Visit bank websites like SBI, HDFC, LIC Housing]