Understand your loan
How a Home Loan EMI is calculated
A home loan is usually the largest and longest loan you'll take — often 15 to 30 years. Even a small change in interest rate or tenure can swing the total interest by lakhs of rupees, so it pays to model it carefully before you sign.
What is an EMI?
EMI stands for Equated Monthly Instalment — the fixed amount you repay to your lender every month until the loan is fully cleared. Each EMI has two parts: a portion that goes towards the principal (the money you borrowed) and a portion that goes towards the interest (the lender's charge for the loan).
The EMI formula
Banks and NBFCs in India use the reducing-balance method. The standard formula is:
In the early years, a larger share of every EMI goes towards interest. As the outstanding principal shrinks, more of each instalment chips away at the principal — so the interest portion of each EMI keeps shrinking over time.
Example EMI calculations (India)
Worked examples using the reducing-balance formula above. Your actual EMI depends on the amount, rate and tenure your lender offers — adjust the calculator at the top to match. Illustrative rates shown are typical ranges as of June 2026, not live lender quotes.
| Loan type | Amount | Rate (p.a.) | Tenure | Monthly EMI | Total interest | Total payable |
|---|---|---|---|---|---|---|
| Home Loan | ₹50,00,000 | 8.5% | 20 years | ₹43,391 | ₹54,13,840 | ₹1,04,13,840 |
| Home Loan | ₹30,00,000 | 8.75% | 15 years | ₹29,983 | ₹23,96,940 | ₹53,96,940 |
| Car Loan | ₹8,00,000 | 9.5% | 7 years | ₹13,075 | ₹2,98,300 | ₹10,98,300 |
| Personal Loan | ₹5,00,000 | 14% | 5 years | ₹11,634 | ₹1,98,040 | ₹6,98,040 |
Tips to keep your EMI affordable
- Make a larger down payment to reduce the principal and your EMI.
- Compare floating rates across banks — even 0.25% lower saves a lot over 20 years.
- Use annual bonuses for part-prepayments; floating-rate home loans have no prepayment penalty.
- A higher CIBIL score (750+) helps you negotiate a lower rate.
Note: This calculator gives an estimate using a fixed interest rate. Actual EMIs may vary with processing fees, GST on charges, floating-rate revisions and your lender's specific terms.