Buying a home in India has always been a financially intensive decision, and with rising property prices, buyers often look for flexible payment models that reduce the immediate financial burden. Over the last few years, subvention plans especially the 20:80 and 10:90 models have become popular financing options introduced by developers in partnership with banks or NBFCs.

These plans help homebuyers by offering a pay-later structure, making property ownership more accessible without requiring the full cost upfront. However, subvention schemes also come with guidelines and safeguards under RERA, ensuring transparency and accountability.

This blog explains everything you need to know about subvention plans, including meaning, examples, how the 20:80 and 10:90 models work, and what RERA says about them.

What Is the Meaning of Subvention Plan?

A subvention plan is a developer–bank–buyer agreement where the buyer pays a small portion of the property cost during booking, and the developer pays the interest on the buyer’s home loan until possession or a fixed construction milestone.

Key characteristics:

• The buyer pays only 10% or 20% initially.
  
• The bank disburses the loan amount progressively to the developer.
  
• The developer pays the EMI interest on behalf of the buyer until possession.
  
• The buyer starts paying EMIs only after the free-EMI period ends.
  

This model reduces immediate financial stress for homebuyers while ensuring developers receive working capital earlier.

What Is an Example of a Subvention?

A common example of subvention:

A buyer books a ₹1 crore apartment under a 10:90 plan:

• Buyer pays ₹10 lakh (10%).
  
• Bank disburses the remaining ₹90 lakh to the developer as construction progresses.
  
• Developer pays the interest on the ₹90 lakh loan until possession.
  
• Buyer pays zero EMIs during construction.
  
• Once possession is offered, the buyer starts paying the EMIs.
  

This makes buying easier without committing to large monthly payments during construction.

What Is the 20:80 Subvention Plan?

The 20:80 subvention plan is one of the most widely used real estate payment models in India.

How it works:

• Buyer pays 20% of the property value at booking.
  
• The bank pays 80% to the developer as per the construction schedule.
  
• Developer pays the interest (pre-EMI) on the buyer’s loan until possession or a specific RERA milestone.
  
• Buyer starts paying EMIs only after possession.
  

Why homebuyers prefer it:

• Minimal upfront cost
  
• No double financial burden (rent + EMI) during construction
  
• Allows more time to arrange funds
  

Why developers offer it:

• Faster project cash flow
  
• Easier for buyers to commit
  
• Better sales velocity
  

What Is the 10:90 Subvention Plan?

The 10:90 plan is even more buyer-friendly.

How it works:

• Buyer pays 10% at booking.
  
• Bank funds 90% of the payment to the developer as per approved construction stages.
  
• Developer pays all interest until possession.
  
• Buyer begins EMI payments only after taking possession.
  

This is extremely attractive for first-time buyers who want to reduce liability during construction.

RERA Rules for Subvention Scheme

Before RERA (Real Estate Regulation and Development Act, 2016), subvention schemes posed risks such as project delays or misuse of loan disbursements.
After RERA, strict guidelines were established:

 RERA Guidelines That Affect Subvention Plans:

1. No bank can disburse loan amounts without linking it to construction milestones.This prevents developers from accessing large sums before actual work progresses.
   
2. Developers must register the project under RERA, disclose financial partners, and specify the payment plan clearly.
   
3. If the developer delays the project, they may be required to compensate the buyer as per RERA terms.
   
4. All tri-party agreements (buyer–bank–builder) must clearly specify:
   
   • Who pays EMIs and for how long
     
   • Penalty clauses for delays
     
   • Exact possession date
     
5. Banks must follow RBI guidelines for loan disbursement under construction-linked plans, reducing buyer risk.
   
6. States like Haryana, Uttar Pradesh, Maharashtra strictly monitor subvention-linked disbursements under RERA.
   

 Factually important note:

The RBI discouraged “innovative housing loan schemes” in 2013, but construction-linked subvention plans are still allowed as long as:

• They follow RERA regulations, and
  
• Loans are not fully disbursed upfront.
  

This ensures the model remains safe and regulated for buyers.

How Subvention Plans Are Changing Real Estate Buying in India

1. Lower Entry Barriers for Homebuyers

Subvention plans reduce upfront costs, enabling more young professionals and families to invest in homes without heavy down payments.

2. No Financial Burden During Construction

Buyers avoid paying rent and EMI simultaneously. This single advantage has significantly boosted adoption.

3. Boosts Pre-Launch and Under-Construction Sales

Developers attract more customers by offering EMI-free construction periods.

4. Encourages Early Buying Decisions

Since initial investment is low, buyers book sooner, allowing developers to maintain cash flow.

5. Increased Transparency Under RERA

RERA ensures that subvention schemes today operate with more accountability and clear documentation.

6. Better Cash Flow for Developers

Developers receive bank-funded amounts based on construction milestones, allowing smooth project progress.

7. Reduced Risk for Buyers

Because EMIs are not paid during construction, buyers face less financial stress in case of minor delays.

Are Subvention Plans Completely Risk-Free?

While subvention models offer many benefits, buyers should be aware of:

• The credibility of the developer
  
• Possession timelines
  
• RERA registration and compliance
  
• The terms in the tri-party agreement
  

If the project is delayed significantly, EMI responsibilities may switch to the buyer depending on the agreement.

This is why RERA oversight and choosing reputed developers is crucial.

Conclusion – Subvention Plans Can Be a Smart Choice With Proper Understanding

The 20:80 and 10:90 subvention plans have transformed the way Indians purchase real estate, especially under-construction properties. When used correctly and backed by RERA-compliant documentation these models offer lower financial pressure, easier entry into the property market, and greater flexibility.

If you’re considering a subvention plan, always verify:

• RERA registration
  
• Developer reputation
  
• Bank partnership
  
• Terms of the tri-party agreement
  

With proper due diligence, subvention plans can be one of the most buyer-friendly ways to own a home in India.

FAQs

1. What is the meaning of a subvention plan in real estate?
   A subvention plan is a payment scheme where the buyer pays a small percentage upfront while the developer pays the loan interest until possession.
   
2. What is an example of a subvention?
   The buyer pays 20% upfront, the bank funds 80% as per construction milestones, and the developer pays the interest during construction.
   
3. What is the 10:90 subvention plan?
   The buyer pays 10% initially, and the developer covers the interest on the 90% bank-funded amount until possession.
   
4. What are RERA rules for subvention schemes?
   RERA mandates construction-linked disbursement, clear tri-party agreements, and developer accountability for delays.