Complete guide
Reviewed July 2026A home loan is most households' largest financial commitment — typically 10–30 years of EMIs on the biggest sum they'll ever borrow. Small differences in rate, tenure or prepayment behaviour compound into differences of many lakhs, so the arithmetic deserves ten minutes of attention before you sign for two decades.
This calculator gives you the exact EMI for any loan amount, rate and tenure using the reducing-balance formula every bank and housing finance company uses, plus total interest, a principal-vs-interest chart, and a complete month-by-month amortization schedule.
Use it three ways: to size a loan you can genuinely afford, to compare lender offers on total cost rather than headline EMI, and to see precisely what a prepayment or balance transfer would save.
Home loan EMI formula
EMI = P × r × (1 + r)^n / ((1 + r)^n − 1) P = loan amount r = monthly rate = annual rate ÷ 12 ÷ 100 n = tenure in months
Home loans in India use monthly reducing balance: each month's interest is charged only on what you still owe. The EMI stays constant while its composition shifts — early EMIs are mostly interest, late EMIs mostly principal.
Worked example: ₹50 lakh at 8.75% for 20 years
- r = 8.75 ÷ 12 ÷ 100 = 0.007292; n = 240 months.
- (1.007292)^240 = 5.7096.
- EMI = 50,00,000 × 0.007292 × 5.7096 ÷ 4.7096 ≈ ₹44,186.
- Total payment = ₹1.06 crore; total interest = ₹56.0 lakh — 112% of the amount borrowed.
- First EMI's split: ₹36,458 interest, ₹7,728 principal. It takes about 13 years before the split reaches 50:50.
EMI at a glance
Scale linearly: a ₹60 lakh loan at 8.5% for 20 years is 6 × ₹8,678 ≈ ₹52,068/month. Notice how little the EMI falls between 20 and 25 years (~7%) — while total interest jumps roughly 30%. Tenures beyond 20 years buy little affordability at great cost.
| Rate | 10 years | 15 years | 20 years | 25 years |
|---|---|---|---|---|
| 8.0% | ₹12,133 | ₹9,557 | ₹8,364 | ₹7,718 |
| 8.5% | ₹12,399 | ₹9,847 | ₹8,678 | ₹8,052 |
| 9.0% | ₹12,668 | ₹10,143 | ₹8,997 | ₹8,392 |
| 9.5% | ₹12,940 | ₹10,442 | ₹9,321 | ₹8,737 |
Prepayment: the highest-return 'investment' most borrowers ignore
Because interest accrues on the outstanding balance, every prepaid rupee earns you the loan rate, guaranteed, for the remaining tenure. RBI rules prohibit prepayment penalties on floating-rate loans to individuals, making home loan prepayment a risk-free 8.5–9.5% 'return' — better than any FD.
| Action | Interest saved | Tenure cut |
|---|---|---|
| One extra EMI (₹44,186) every year | ₹10.6 lakh | ~3 yr 2 mo |
| ₹5,000/month extra from day one | ₹8.1 lakh | ~2 yr 8 mo |
| ₹5 lakh lump sum in year 3 | ₹11.7 lakh | ~2 yr 10 mo |
| EMI stepped up 5% every year | ₹19.9 lakh | ~6 yr 6 mo |
Tax benefits (old regime)
Under India's old tax regime, home loan principal qualifies under Section 80C (up to ₹1.5 lakh/year within the overall cap) and interest under Section 24(b) (up to ₹2 lakh/year for self-occupied property; fully deductible against rent for let-out property, subject to set-off limits). The new regime offers no self-occupied deductions, so borrowers should compare regimes annually — for many, the loan is the deciding factor. Verify current provisions each budget year.
How much home loan can you afford?
- Lenders cap FOIR (all EMIs ÷ net monthly income) at roughly 50–55%; prudent borrowers stay under 40% to survive rate resets.
- Banks typically finance 75–90% of property value (LTV) — lower for larger loans; budget 10–25% down payment plus 5–8% for stamp duty, registration and interiors that loans don't cover.
- Stress-test the EMI at +2%: floating rates reset with the repo cycle, and a ₹44,186 EMI at 8.75% becomes ₹50,671 at 10.75% on the same loan.
- Keep 6 months of EMIs in your emergency fund before committing.
Common mistakes
- Choosing 25–30 year tenures for a marginally lower EMI — total interest can exceed the principal itself.
- Comparing lenders on EMI alone, ignoring processing fees, insurance bundling and rate-reset behaviour.
- Never asking your existing bank for a rate revision — a phone call and a small conversion fee often cut 0.25–0.5% off older spread-heavy loans.
- Skipping balance-transfer math: moving a ₹40 lakh balance from 9.4% to 8.6% with 15 years left saves ≈ ₹2.9 lakh even after fees.
- Prepaying nothing because 'the tax benefit is worth it' — the benefit caps at ₹2 lakh interest; interest beyond that is pure cost.
Frequently asked questions
Glossary
- Reducing balance
- Interest charged each month only on the outstanding principal — the standard for home loans.
- FOIR
- Fixed Obligation to Income Ratio — share of net income consumed by EMIs; lenders cap ~50–55%.
- LTV
- Loan-to-Value — the loan as a percentage of property value; RBI caps 75–90% by loan size.
- Amortization schedule
- Month-by-month table of each EMI's interest, principal and closing balance.
- Prepayment
- Paying principal ahead of schedule; penalty-free on floating-rate loans to individuals.
- Balance transfer
- Refinancing the outstanding loan with a cheaper lender.
- Repo-linked rate
- A floating rate benchmarked to the RBI repo rate, resetting at least quarterly.
- Section 24(b) / 80C
- Old-regime income-tax deductions for home loan interest and principal respectively.
Key takeaways
The home loan formula rewards three behaviours: negotiate the rate relentlessly (every 0.25% on ₹50 lakh/20 yr ≈ ₹1.8 lakh), keep tenure at or under 20 years, and prepay early with tenure reduction — a guaranteed 8.5–9.5% return the RBI made penalty-free. Use the amortization schedule to watch the interest front-load, stress-test at +2%, and revisit your rate (and tax regime) every year.
Enter your loan details above, open the schedule tab, and test one extra EMI per year — the interest saved usually funds a car.