CRGFTLIH: Status in 2026 and What to Use Instead
CRGFTLIH, the guarantee for low-income home loans, moved from NHB to NCGTC under PMAY-U 2.0. What it covers, its 2026 status and what borrowers should use instead.
In this article
The Credit Risk Guarantee Fund Trust for Low Income Housing (CRGFTLIH) is not a subsidy you can apply for. It is a guarantee that protects a bank or housing finance company if a low-income urban borrower defaults on a small home loan given without collateral or a guarantor. As of October 2026, it has been restructured under PMAY-U 2.0: its corpus was raised from ₹1,000 crore to ₹3,000 crore and its management moved from the National Housing Bank (NHB) to the National Credit Guarantee Trustee Company (NCGTC). For a borrower, the practical scheme to use is the PMAY-U 2.0 interest subsidy, along with a lender that accepts guarantee-backed, collateral-light loans.
This article explains what the trust did, what happened to it, and what a low-income family should do instead.
What CRGFTLIH was set up to do
The trust was registered on 1 May 2012 by the then Ministry of Housing and Urban Poverty Alleviation, notified in July 2012 and managed by NHB. Many families in the Economically Weaker Section (EWS) and Lower Income Group (LIG) have informal incomes and cannot offer collateral or a guarantor, so banks avoided lending to them. The trust's guarantee was meant to take part of that risk off the lender.
Key features under the NHB-era rules:
| Feature | Rule under NHB guidelines |
|---|---|
| Who is covered | New individual EWS/LIG borrowers in urban areas |
| Loan limit | ₹5 lakh originally; raised to ₹8 lakh for loans from 1 October 2014 |
| House size | Up to 430 sq ft (40 sq m) carpet area |
| Security | No collateral and no third-party guarantee; only the house itself as primary security |
| Purpose | Purchase, construction, acquisition (new or resale) and home improvement; not loans fully or partly for repairs or renovation |
| Guarantee cover | 90% of the amount in default for loans up to ₹2 lakh; 85% for larger loans |
| Guarantee fee | One-time 1% of the sanctioned loan, paid by the lender; up to 50% of it can be passed on through the interest rate, not as an upfront fee |
| Lock-in | Lender cannot claim for 24 months from the last disbursement, the guarantee start date, or 2 months after the house is complete, whichever is later |
| Eligible lenders | Scheduled commercial banks, RRBs, urban co-operative banks, NBFC-MFIs, apex co-operative housing finance societies, NHB-registered HFCs |
The old guidelines defined EWS and LIG by income limits set by the housing ministry from time to time. Today PMAY-U 2.0 uses EWS up to ₹3 lakh, LIG ₹3-6 lakh and MIG ₹6-9 lakh a year.
Status in 2026: what changed
When the Cabinet approved PMAY-U 2.0 in August 2024, it said the CRGFT corpus would be raised from ₹1,000 crore to ₹3,000 crore to give credit risk guarantee on affordable housing loans to EWS/LIG borrowers buying or building their first home. It also said management would move from NHB to NCGTC and that the housing ministry (MoHUA) would issue modified guidelines. NHB's annual report for 2024-25 states that the management and functions of CRGFTLIH were transferred to NCGTC from 15 January 2025.
As of October 2026, NHB's page still hosts the old operational guidelines, but we could not find the revised PMAY-U 2.0 guarantee guidelines published by MoHUA or NCGTC. So the honest position is:
- The guarantee fund exists and has been enlarged; it has not been closed.
- It is now run by NCGTC, not NHB.
- Exact current terms (loan limit, cover percentage, fee) under the restructured scheme are not publicly confirmed, so the NHB-era numbers above should be treated as historical.
- Borrowers never applied for it directly, and still cannot.
If you are an EWS/LIG borrower, ask the lender in writing whether it covers loans under the credit risk guarantee and what it charges. The answer may affect whether it asks you for a guarantor.
Worked example: how the guarantee works for the lender
Suppose a housing finance company lends ₹6 lakh to an LIG borrower for 20 years at 9.5% without collateral or a guarantor. The EMI is about ₹5,593. Under the NHB-era rules, figures are illustrative:
| Step | Amount |
|---|---|
| Loan sanctioned | ₹6,00,000 |
| Guarantee fee at 1% (paid by the lender) | ₹6,000 |
| Maximum that can be passed to the borrower through the rate | ₹3,000 (50%) |
| Amount in default after 3 years (assumed) | ₹4,00,000 |
| Guaranteed portion at 85% | ₹3,40,000 |
| First payment to the lender (75% of guaranteed portion) | ₹2,55,000 |
| Balance paid after recovery proceedings end | ₹85,000 |
Two things follow. First, the guarantee makes lenders more willing to say yes to a family without collateral. Second, it does not forgive anything for the borrower: the lender must start legal recovery to claim, and the default is reported to the credit bureaus. Use our EMI calculator to make sure the EMI is affordable before you sign.
What to use instead in 2026
| Need | What to use | Where to start |
|---|---|---|
| Lower interest on a first home loan (urban) | PMAY-U 2.0 Interest Subsidy Scheme: 4% on the first ₹8 lakh, up to ₹1.80 lakh | PMAY home loan subsidy guide |
| A grant to build a house (rural) | PMAY-Gramin: ₹1.20-1.30 lakh plus toilet and wage support | PMAY Gramin guide |
| A home loan with thin documents | Affordable housing finance companies and small finance banks that assess informal income | Home loan eligibility and documents |
| Small loan for repairs or extension | Home improvement loans from banks and HFCs; note CRGFTLIH never covered pure repairs | Your bank or HFC |
Lenders taking part in PMAY-U 2.0 are the same banks and HFCs that would use the restructured guarantee, so applying for PMAY-U 2.0 through a listed Primary Lending Institution is the most direct route for most urban EWS/LIG families.
Steps for a low-income urban borrower
- Check PMAY-U 2.0 eligibility: household income up to ₹9 lakh, no pucca house anywhere in India, no housing-scheme benefit in the last 20 years.
- Register on the PMAY-U 2.0 portal (linked from pmay-urban.gov.in) and choose a Primary Lending Institution.
- Prepare income proof: salary slips, bank statements, or for informal earners, a self-declaration and 6-12 months of bank statements. Ask whether the lender accepts these.
- Ask about guarantee cover: whether the loan will be covered under the credit risk guarantee, and whether that removes the need for a guarantor.
- Check your credit report first; see how to check your CIBIL score for free.
- Compare all-in cost: interest rate, processing fee, any guarantee fee loaded into the rate, and insurance.
Common reasons such loans are rejected
- Income cannot be verified at all (no bank account history)
- Low or no credit score with past defaults
- Property without clear title or approved plan
- House size or loan amount above the lender's affordable-housing limit
- Existing pucca house in the family's name (for PMAY-U 2.0)
How to complain
- Lender's grievance officer: for rejection without reasons, hidden fees or a guarantor demanded despite promises.
- Regulator: for a bank or other RBI-regulated lender, if the lender does not resolve it within 30 days, use the RBI Integrated Ombudsman at cms.rbi.org.in. For a housing finance company, check the escalation route printed in its grievance policy, which may be NHB's complaint system or the RBI Ombudsman.
- PMAY-U 2.0 issues: use the grievance option on the PMAY-U portal or CPGRAMS at pgportal.gov.in.
Avoid agents who sell "guarantee scheme loans"
No one needs to pay an agent to get a loan "under CRGFTLIH" or any government guarantee; the lender applies for the cover itself. Agents who ask for an upfront fee to arrange a "government guaranteed home loan" are a red flag. Report fraud at cybercrime.gov.in or call 1930.
Key takeaways
- CRGFTLIH guarantees lenders, not borrowers, against default on collateral-free home loans to urban EWS/LIG families.
- Under NHB it covered loans up to ₹8 lakh (since October 2014), with 85-90% cover and a 1% fee paid by the lender.
- As of October 2026 it has been restructured under PMAY-U 2.0: corpus ₹3,000 crore, managed by NCGTC since 15 January 2025; revised terms are not publicly confirmed.
- You cannot apply for it directly; for a first urban home, use the PMAY-U 2.0 interest subsidy through a participating lender.
- Defaulting on a guaranteed loan still means full liability and a damaged CIBIL score.
- Never pay agents for a "guaranteed" government home loan.
Frequently asked questions
What is CRGFTLIH?
The Credit Risk Guarantee Fund Trust for Low Income Housing is a government trust set up in May 2012 that guarantees banks and housing finance companies against default on small home loans given to EWS and LIG families in urban areas without collateral or a third-party guarantee. It protects the lender, not the borrower.
Is CRGFTLIH still active in 2026?
It has been restructured rather than shut. Under PMAY-U 2.0 its corpus was raised from ₹1,000 crore to ₹3,000 crore, and the National Housing Bank's annual report says its management passed to NCGTC from 15 January 2025. As of October 2026 we could not find published revised guidelines, so ask your lender whether it currently covers new loans under it.
Can I apply for CRGFTLIH directly?
No. Only a member lending institution can apply for the guarantee cover. A borrower applies for a normal home loan; the lender decides whether to cover it under the scheme.
What was the maximum loan under CRGFTLIH?
The original limit was ₹5 lakh. NHB raised it to ₹8 lakh for loans given on or after 1 October 2014. The revised PMAY-U 2.0 framework may set different limits, which should be confirmed with the lender.
Does the guarantee mean I do not have to repay the loan if I default?
No. The guarantee pays part of the lender's loss, but the lender must still recover the full dues from you through legal process. Default also damages your CIBIL score.
This article is for general education and is not personalised financial, tax or legal advice. Rates and rules are as of 25 Oct 2026; confirm current terms with your lender, AMC or a qualified adviser.
