PMAY-U 2.0 for Bengaluru Buyers: Who Qualifies, Which Vertical Fits and What It Pays
PIB releases on PMAY-U 2.0 set out four verticals, income bands of up to Rs 9 lakh, an interest subsidy of up to Rs 1.80 lakh on loans up to Rs 25 lakh for homes up to Rs 35 lakh, Redeemable Housing Vouchers for private projects and a state reform for nominal stamp duty on homes up to 60 sq m. Here is how a Bengaluru buyer can read them.
Rs 35 lakh. That is the ceiling on house value for the interest subsidy under the second phase of the government's urban housing mission, and for a Bengaluru buyer it is the first number to check. According to the Union Cabinet's release of 9 August 2024 approving Pradhan Mantri Awas Yojana-Urban (PMAY-U) 2.0, a buyer taking a home loan of up to Rs 25 lakh for a house valued up to Rs 35 lakh can get a 4 per cent interest subsidy on the first Rs 8 lakh of the loan, capped at Rs 1.80 lakh.
The interest subsidy is only one of four routes in the scheme. This guide sets out all four, the income bands and a stamp duty reform the Centre has asked states to adopt, using two Press Information Bureau releases. It does not assess any individual's eligibility or any project.
The short answer. PMAY-U 2.0 covers EWS, LIG and MIG families with annual income up to Rs 9 lakh who have no pucca house anywhere in India. It runs through four verticals: Beneficiary-Led Construction, Affordable Housing in Partnership with Redeemable Housing Vouchers for private projects, Affordable Rental Housing and the Interest Subsidy Scheme. The Interest Subsidy Scheme pays up to Rs 1.80 lakh in five yearly instalments. A December 2025 release says states must adopt reforms including stamp duty and registration charges below 1 per cent for houses up to 60 sq m under the scheme. The trade-off: the limits are built around smaller, lower-priced homes, so a Bengaluru buyer should check early whether the target home falls within the value cap.
Who is eligible for PMAY-U 2.0?
Households in three income bands without a pucca house. The Cabinet release says families "belonging to EWS/LIG/Middle Income Group (MIG) segments having no pucca house anywhere in the country are eligible to purchase or construct a house under PMAY-U 2.0."
It defines EWS households as those with annual income up to Rs 3 lakh, LIG households as those from Rs 3 lakh up to Rs 6 lakh, and MIG households as those from Rs 6 lakh up to Rs 9 lakh. Coverage extends to all statutory towns as per Census 2011 and towns notified later, including notified planning areas and areas under urban development authorities or similar bodies entrusted with urban planning under state law.
The release says the scheme will provide financial assistance to 1 crore urban poor and middle-class families "to construct, purchase or rent a house at an affordable cost in urban areas in 5 years", with government assistance of Rs 2.30 lakh crore. A later PIB release of 11 December 2025 says PMAY-U 2.0 was launched with effect from 1 September 2024.
What are the four verticals?
Four different kinds of help, aimed at different households. The Cabinet release describes them as follows.
| Vertical | What the Cabinet release says | Who it may suit in Bengaluru |
|---|---|---|
| Beneficiary-Led Construction (BLC) | Assistance to individual EWS families to build a new house on their own vacant land | EWS households that already own a plot |
| Affordable Housing in Partnership (AHP) | Assistance to EWS beneficiaries for houses built through partnerships; Redeemable Housing Vouchers for purchases from whitelisted private projects | EWS buyers looking at approved affordable projects |
| Affordable Rental Housing (ARH) | Rental housing for working women, industrial workers, urban migrants, students and others | Those who need short-term housing rather than ownership |
| Interest Subsidy Scheme (ISS) | 4% subsidy on first Rs 8 lakh, up to 12 years, for loans up to Rs 25 lakh on houses up to Rs 35 lakh | EWS, LIG and MIG buyers taking a home loan for a lower-priced home |
| Central assistance in AHP and BLC | Rs 2.50 lakh per unit; for most states, Rs 1.50 lakh central plus a minimum Rs 1 lakh state share | EWS beneficiaries under AHP or BLC |
For AHP, the release adds that "States/UTs/ULB shall whitelist the private sector projects complying with all the necessary norms." That makes the whitelist the first thing a Bengaluru buyer hoping to use a voucher should ask about.
How does the interest subsidy work?
As a capped subsidy on part of the loan. The Cabinet release says the ISS vertical "will provide benefits of subsidy on home loans for EWS/LIG and MIG families. Beneficiaries taking loan up to Rs 25 lakh with house value up to 35 lakh will be eligible for 4 percent interest subsidy on first Rs 8 lakh loan up to 12 years tenure. A maximum of Rs 1.80 lakh subsidy will be given to eligible beneficiaries in 5-yearly instalments through push button."
It adds that beneficiaries can access their accounts through the website, OTP or smart cards, and that ISS is run as a Central Sector Scheme while the other verticals are Centrally Sponsored. The December 2025 release points readers to the scheme's operational guidelines on the PMAY-U website for full detail.
PropNewz explained the detailed ISS rules, including the lock-in and the documents lenders ask for, in our guide to the PMAY-U 2.0 interest subsidy. Those rules apply nationally, so a Bengaluru buyer can use that guide alongside this one.
What does the Rs 35 lakh cap mean in Bengaluru?
That the subsidy fits a narrow slice of the market. A buyer can test it with arithmetic. With a Rs 35 lakh house and a Rs 25 lakh loan, the buyer needs Rs 10 lakh from savings, before stamp duty, registration and other costs. A house valued above Rs 35 lakh falls outside the ISS limit as the Cabinet release describes it, whatever the buyer's income.
The subsidy itself is modest against the loan. Rs 1.80 lakh spread over five instalments is real help for a household earning up to Rs 9 lakh, but it does not change the basic affordability of a home. Our EMI worked example for a Bengaluru home loan shows how much the monthly payment depends on loan size and tenure, which matter more than the subsidy for most budgets.
If your target home is close to the cap, ask the lender how it assesses house value for this purpose, and get the answer in writing before you sign a sale agreement.
How is the cost shared between the Centre and states?
Differently by vertical. The Cabinet release says PMAY-U 2.0 is a Centrally Sponsored Scheme except for ISS, which is a Central Sector Scheme. For AHP and BLC, it gives government assistance of Rs 2.50 lakh per unit and makes a state or union territory share mandatory. For most states, the table in the release shows Rs 1.50 lakh per unit from the Centre and a minimum of Rs 1 lakh per unit from the state, and adds that states may give an additional top-up to improve affordability.
The ISS subsidy, by contrast, is paid by the Government of India, up to Rs 1.80 lakh per unit. For a buyer, the split matters mainly in the AHP and BLC routes, where the state agency's own rules and any top-up decide the final help available.
What is the 60 sq m stamp duty reform?
A change the Centre has asked states to make, not an automatic discount. The December 2025 release says that "under PMAY-U 2.0, States/UTs have been mandated to formulate Affordable Housing Policy (AHP) incorporating various reforms. One of the reforms is Nominal (less than 1%) Stamp Duty/Registration Charges for houses (up to 60 sqm.) registered under PMAY-U 2.0."
It also says states and union territories must frame an Affordable Housing Policy that provides reforms and incentives, "including reduction of stamp duty on time bound basis to develop affordable housing ecosystem."
Whether and how Karnataka has applied this is a question for the state's notified policy and its registration department. This guide does not state Karnataka's position. A buyer of a small home under the scheme should ask the sub-registrar or a lawyer what rate applies before budgeting for registration.
How should a Bengaluru buyer check PMAY-U 2.0 before booking?
By matching the household and the home to the scheme's limits first, and the project second.
- Confirm your household's annual income band and that no family member owns a pucca house anywhere in India.
- Decide which vertical fits: own plot, whitelisted affordable project, rental, or a home loan subsidy.
- For ISS, check that the loan will be up to Rs 25 lakh and the house value up to Rs 35 lakh as your lender assesses it.
- For AHP vouchers, ask the state or city agency for its list of whitelisted private projects.
- Ask the lender how the Rs 1.80 lakh subsidy is credited and how you will track the five instalments.
- For a home up to 60 sq m, ask what stamp duty and registration rate applies under Karnataka's current policy.
- Read the scheme's operational guidelines on the official PMAY-U website before applying, and keep copies of every document you submit.
Frequently asked questions
Who is eligible for PMAY-U 2.0?
According to the Cabinet release of 9 August 2024, families in the EWS, LIG and MIG segments with no pucca house anywhere in the country are eligible. EWS means annual income up to Rs 3 lakh, LIG from Rs 3 lakh to Rs 6 lakh and MIG from Rs 6 lakh to Rs 9 lakh.
How much interest subsidy does PMAY-U 2.0 give?
The Cabinet release says beneficiaries taking a loan up to Rs 25 lakh for a house valued up to Rs 35 lakh can get a 4 per cent interest subsidy on the first Rs 8 lakh, for up to 12 years. The maximum subsidy is Rs 1.80 lakh, paid in five yearly instalments.
Can I use PMAY-U 2.0 to buy a flat from a private builder?
Under the AHP vertical, the Cabinet release says Redeemable Housing Vouchers will be given to EWS beneficiaries who purchase a house from private projects, and that states, union territories or urban local bodies shall whitelist private projects complying with the necessary norms. Ask the state agency which projects are whitelisted.
Does PMAY-U 2.0 reduce stamp duty?
A PIB release of 11 December 2025 says states and union territories must frame an Affordable Housing Policy, and one listed reform is nominal stamp duty and registration charges, below 1 per cent, for houses up to 60 sq m registered under PMAY-U 2.0. Check Karnataka's notified policy for what applies.
This article summarises Press Information Bureau releases for information only. It is not financial or legal advice, and the scheme guidelines, your lender and the implementing agency decide individual eligibility.
Last updated 2026-11-11. PropNewz Team.
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