Formula
EMI = P x r x (1 + r)^n / ((1 + r)^n - 1), where P is principal, r is monthly interest rate, and n is total months.
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Calculator Guide
How Home Loan EMI Is Calculated
Use this guide to understand the EMI formula, how interest affects your outflow, and how tenure changes your monthly installment.
Example Calculation
- Loan Amount: Rs 1.00 Cr
- Interest Rate: 8.5% per year
- Tenure: 20 years (240 months)
Estimated EMI: around Rs 86,782 per month
Investment Insights
- Longer tenure lowers EMI but increases total interest paid.
- A small rate change has a large impact on long-tenure loans.
- Prepaying principal early can significantly reduce interest burden.
FAQs
What EMI can I afford with Rs 1 lakh salary?
A common rule is keeping total EMI obligations within 35-45% of monthly take-home income, depending on your expenses and risk comfort.
How can I reduce my EMI burden?
Increase down payment, choose a longer tenure, negotiate lower rates, or refinance after rate cycles move down.
Should I choose fixed or floating rate?
Fixed rates provide payment predictability, while floating rates can be cheaper over long periods if rates soften.