PMAY-U 2.0 Small Print: Resale Flats, Balance Transfers and the Lock-in for Bengaluru Buyers
A Bengaluru buyer's guide to the conditions in the PMAY-U 2.0 scheme guidelines: eligibility, how the Rs 1.80 lakh interest subsidy is released, why a resale flat or a balance transfer can end the claim, the five year lock-in, and whose name must go on the sale deed.
Picture a couple in Kengeri with a household income of Rs 8.5 lakh, about to buy a Rs 32 lakh resale flat with a Rs 24 lakh home loan. They have read that PMAY-U 2.0 offers an interest subsidy of up to Rs 1.80 lakh and assume they qualify. They might. But the scheme's guidelines contain conditions that can quietly rule a purchase out: whether the flat has carried the subsidy before, whose name goes on the deed, whether the loan will later move to another bank, and how long they must hold the home.
The short answer. Under the PMAY-U 2.0 scheme guidelines, the Interest Subsidy Scheme gives eligible EWS, LIG and MIG households with income up to Rs 9 lakh a subsidy of 4 percent on the first Rs 8 lakh of a loan of up to Rs 25 lakh, for a house worth up to Rs 35 lakh with carpet area up to 120 square metres. The maximum release is Rs 1.80 lakh, paid in five equal yearly instalments. The subsidy is given only once for a property, is lost if the borrower later switches lenders by balance transfer, and comes with a five year lock-in on selling the house. The trade-off: the subsidy is real money for a first home, but it binds you to the property and the lender in ways a normal home loan does not.
Who is eligible for PMAY-U 2.0 in Bengaluru?
First time owners in the income bands. The PMAY-U 2.0 scheme guidelines say families belonging to EWS, LIG and MIG categories, living in urban areas, having no pucca house anywhere in the country, are eligible to purchase or construct a house under the scheme. EWS households have an annual income of up to Rs 3 lakh, LIG from Rs 3 lakh up to Rs 6 lakh, and MIG from Rs 6 lakh up to Rs 9 lakh.
The guidelines define a beneficiary family as husband, wife, unmarried sons and unmarried daughters, and say the family should not own a pucca house, meaning an all weather dwelling unit, in any member's name in any part of India. A beneficiary must also give an undertaking declaring that they meet the income criteria and do not own a pucca house anywhere in India.
There is a further exclusion. A beneficiary who has been allotted a house under any housing scheme of the central government, a state or union territory government or a local self government in the last 20 years, in urban or rural areas, is not eligible. The guidelines say the scheme runs for five years from 1 September 2024.
What does the interest subsidy actually pay?
A capped amount over five years. The guidelines say subsidy is provided on home loans sanctioned and disbursed on or after 1 September 2024, for purchase, re-purchase or construction of houses. Households with income up to Rs 9 lakh, a loan of up to Rs 25 lakh and a property value of up to Rs 35 lakh get a subsidy of 4.0 percent on the first Rs 8 lakh for a tenure of up to 12 years. The carpet area of the house must be up to 120 square metres.
The maximum release is Rs 1.80 lakh, with a maximum net present value of Rs 1.50 lakh at a discount rate of 8.5 percent, for borrowers with a loan tenure of more than five years. The guidelines say the subsidy is released in five equal yearly instalments. At the maximum, that is Rs 36,000 a year for five years.
The mechanics matter for your EMI. The guidelines say each instalment is released through DBT into the borrower's loan account, provided the loan is active and more than 50 percent of the principal is outstanding at the time of release. The lender credits the subsidy upfront by deducting it from the principal, and the borrower pays EMI on the remainder. We worked through how the subsidy interacts with a rate rise in our guide to the PMAY-U 2.0 subsidy after the repo hike.
Can you claim the subsidy on a resale flat?
Only if the property has not already carried it. The guidelines list exclusion criteria for the Interest Subsidy Scheme. The first is that the subsidy will be provided only once for a property. If the property is sold to someone else, the purchaser cannot take the benefit on that property. Lenders are to check the unified web portal to ensure the previous owner has not taken the subsidy before initiating the current buyer's claim.
For a resale buyer in Bengaluru, that turns the subsidy into a due diligence question. Ask the seller whether they took a PMAY subsidy on the flat, and expect your lender to check the portal. A flat bought new in 2025 with a subsidised loan cannot pass the same subsidy to you.
The guidelines also say the scheme is available for purchase or re-purchase, so a resale purchase is not excluded as such. The restriction is on the property having carried the subsidy once already.
What happens if you move the loan to another bank?
You lose the claim. The guidelines say that if a borrower takes a housing loan from one lending institution and later switches to another for a balance transfer, the borrower will not be eligible to claim the interest subsidy again. And if a person has not claimed the subsidy from the first lender, they will not be eligible after the balance transfer either.
That trade-off matters after the RBI's repo hike of 7 October 2026, if you are weighing a move to a cheaper lender. If you hold, or plan to claim, a PMAY-U 2.0 subsidy, a balance transfer can cost you the remaining instalments. We looked at balance transfers more generally in our guide to switching lenders after the repo hike; for a PMAY borrower, run that comparison with the lost subsidy included.
How do the scheme's conditions compare?
The table below sets out five conditions from the PMAY-U 2.0 guidelines and what each means for a Bengaluru buyer:
| Condition | What the guidelines say | What it means for you |
|---|---|---|
| One subsidy per property | Subsidy provided only once for a property; a later purchaser cannot take it | Ask a resale seller whether they claimed it |
| Balance transfer | Switching lenders ends eligibility to claim the subsidy again | Price the lost instalments before moving the loan |
| Lock-in | Five years from disbursal of the first loan instalment under ISS; no sale or transfer | Plan to hold the home for at least five years |
| Ownership | House in the name of the female head, or jointly with her, save stated exceptions | Put the right names on the sale deed |
| Release condition | Instalment released only if the loan is active and over 50% principal is outstanding | Heavy early prepayment can affect later instalments |
The last row follows from the release condition: if prepayments take the outstanding principal to 50 percent or below before an instalment falls due, the condition for that release is no longer met. Check the timing with your lender before prepaying.
Whose name must be on the sale deed?
Usually a woman's. The guidelines say houses constructed, acquired or purchased with central assistance under the scheme should be in the name of the female head of the household, or in the joint name of the male head of the household and his wife. Only where there is no adult female member can the house be in the name of a male member. Where the applicant is a widower, unmarried, separated or transgender, the house will be in the individual's name.
The guidelines also say that inclusion of a female member's name in the registered title deed or sale deed should be allowed at a later stage, and that states should make provision for exemption of additional stamp duty or registration charges for such cases. Check with the sub-registrar's office what applies in Karnataka before relying on that exemption.
Whether you are buying in a large township or a project such as Akshara Valley Address in Kengeri, use this checklist before you apply:
- Confirm household income is within the EWS, LIG or MIG band and that no family member owns a pucca house anywhere in India.
- Confirm no family member was allotted a government scheme house in the last 20 years.
- Check the loan is up to Rs 25 lakh, the property value up to Rs 35 lakh and carpet area up to 120 square metres.
- For a resale flat, ask whether the seller claimed a PMAY subsidy on the property.
- Put the female head of the household on the sale deed, alone or jointly, as the guidelines require.
- Plan to hold the house for five years from the first loan disbursal.
- Factor in the lost subsidy before any future balance transfer or large prepayment.
Frequently asked questions
Can I get the PMAY-U 2.0 subsidy on a resale flat?
Possibly, since the scheme covers purchase and re-purchase. But the PMAY-U 2.0 guidelines say the interest subsidy is provided only once for a property, so if the seller already claimed it, you cannot take it on that flat. Lenders are to check the unified web portal before your claim.
Will I lose the PMAY subsidy if I transfer my home loan?
Yes. The PMAY-U 2.0 guidelines say a borrower who switches from one lending institution to another through a balance transfer will not be eligible to claim the interest subsidy again, and a person who had not claimed it from the first lender is not eligible after the transfer.
How much PMAY-U 2.0 interest subsidy can I receive?
Up to Rs 1.80 lakh, released in five equal yearly instalments, according to the scheme guidelines. That is 4 percent on the first Rs 8 lakh of a loan up to Rs 25 lakh, for a house worth up to Rs 35 lakh with carpet area up to 120 square metres.
Can I sell a PMAY-U 2.0 house soon after buying?
No. The guidelines set a mandatory lock-in of five years, running from disbursal of the first home loan instalment under the interest subsidy vertical, during which the beneficiary is not allowed to sell or transfer the house. Plan your purchase on the assumption you will hold it that long.
Last updated 2026-10-20. PropNewz Team.
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