“Affordability” as a concept is very generic and could have different meanings for different people based on differences in income levels. Different countries have defined affordable housing to present the economic potential of an individual buying a house. In developed countries like the US and Canada, a commonly accepted guideline for affordable housing is that the cost of housing should not exceed 30 percent of the gross income of the household. Affordable housing and low-cost housing are often interchangeably used but are quite different from each other. Low-cost housing is generally meant for the Economically Weaker Sections (EWS) categories and comprises bare minimum housing facilities while affordable housing is mostly meant for the Low Income Groups (LIG) and the Middle Income Groups (MIG).

Although India has been registering a fast-paced growth during the first decade of the 21st century there is still a significant population below the poverty line (BPL), irrespective of the parameters defining the line. This requires economic and social support to get above the poverty line. The levels of unemployment also remain significantly high, thereby rendering housing unaffordable to many. It is also important to reckon the fact that even today there is a large population that remains financially excluded from the formal banking/financial systems and, in the process, is deprived of access to housing finance.