Calculate your home loan EMI & true cost

How home loan EMI is calculated

EMI (Equated Monthly Instalment) is calculated using the formula EMI = P × r × (1+r)^n / [(1+r)^n − 1], where P is the loan principal, r is the monthly interest rate (annual rate ÷ 12 ÷ 100), and n is the total number of monthly instalments. Every EMI is split into a principal and an interest component — early payments are interest-heavy, and later payments are principal-heavy.

Factors that affect your EMI

• Loan amount: A larger loan directly increases your EMI.
• Interest rate: Even a 0.5% difference can change total interest by lakhs over a 20-year tenure.
• Tenure: Longer tenure lowers monthly EMI but increases total interest paid significantly.
• Credit score: A score above 750 typically gets you the lender's best available rate.

Tips to reduce your total interest cost

• Make a larger down payment to reduce the principal borrowed.
• Choose the shortest tenure your monthly budget comfortably allows.
• Make lump-sum prepayments whenever you receive a bonus or windfall.
• Refinance to a lower-rate lender if rates drop significantly after you take the loan.

Frequently asked questions

Rates from major Indian banks typically range between 8% and 9.5% per year depending on the lender, your credit score, loan amount and whether the rate is fixed or floating. Always compare at least three lenders before finalising.

Increase the loan tenure, make a larger down payment to cut the principal, negotiate a lower interest rate, or make periodic prepayments which reduce outstanding principal and future interest.

Under the old tax regime, interest up to ₹2 lakh/year qualifies under Section 24(b), and principal repayment up to ₹1.5 lakh qualifies under Section 80C — see our 80C tax saving calculator. The new tax regime does not allow these deductions.