How to use the EMI calculator
- Choose the loan type — home, car or personal. This sets typical defaults you can change.
- Enter the loan amount you plan to borrow (the principal, after your down payment).
- Enter the annual interest rate quoted by your bank or NBFC.
- Set the tenure in years. Your EMI, total interest and repayment schedule update instantly.
EMI formula
Indian banks calculate EMIs on a reducing-balance basis using this formula:
- P — loan amount (principal)
- r — monthly interest rate = annual rate ÷ 12 ÷ 100
- n — number of monthly instalments = tenure in years × 12
Worked example
For a home loan of ₹10,00,000 at 8.5% for 20 years: r = 8.5 ÷ 12 ÷ 100 = 0.0070833 and n = 240. Plugging these in gives an EMI of about ₹8,678. Over 240 months you pay ₹20,82,776 in total, so the interest cost is roughly ₹10,82,776 — more than the amount borrowed.
How to reduce your EMI or total interest
- Make a larger down payment. Every rupee you don't borrow saves you interest for the full tenure.
- Prepay when you can. Floating-rate home loans taken by individuals carry no prepayment penalty under RBI rules. Prepayments in the early years save the most interest.
- Negotiate or refinance. A 0.5% lower rate on a ₹50 lakh, 20-year loan saves over ₹3.5 lakh. Compare offers and consider a balance transfer if your rate is above market.
- Pick a shorter tenure. Higher EMIs, but dramatically lower total interest.
Part-prepayment: reduce tenure or reduce EMI?
Add one or more part-prepayments — a one-time lump sum such as a bonus, or a fixed amount every year or month — and choose what your bank should do with it:
- Reduce tenure keeps your EMI the same and closes the loan earlier. This saves the most interest.
- Reduce EMI keeps the end date and lowers your monthly EMI — useful if you want breathing room in your monthly budget.
Example: a ₹50 lakh home loan at 8.5% for 20 years has an EMI of ₹43,391 and total interest of ₹54.14 lakh. Prepaying ₹5 lakh after your 24th EMI and reducing the tenure saves about ₹14.57 lakh in interest and closes the loan 45 months (3 years 9 months) early. The same ₹5 lakh with reduce EMI lowers the EMI to ₹38,864 but saves only about ₹4.78 lakh. Prepaying just ₹1 lakh every year instead saves about ₹18.55 lakh and finishes the loan 6 years early.
Tax benefits on home loan EMIs
Under the old tax regime, principal repayment qualifies for deduction under Section 80C (up to ₹1.5 lakh, shared with other investments), and interest on a self-occupied home loan is deductible up to ₹2 lakh a year under Section 24(b). Use the income tax calculator to see whether the old or new regime works out better for you.
Frequently asked questions
Should I choose reduce tenure or reduce EMI after a prepayment?
Reducing the tenure saves far more interest because you keep paying the same EMI and finish sooner. For a ₹50 lakh, 8.5%, 20-year loan, prepaying ₹5 lakh after two years saves about ₹14.6 lakh with reduce-tenure but only about ₹4.8 lakh with reduce-EMI. Choose reduce-EMI only if you need a lower monthly outgo.
Is there a penalty for prepaying a home loan?
Under RBI rules, banks and NBFCs can't charge prepayment or foreclosure penalties on floating-rate loans taken by individuals for non-business purposes. Fixed-rate loans and business loans may carry a charge — check your loan agreement.
What is EMI?
EMI (Equated Monthly Instalment) is the fixed amount you pay your lender every month until a loan is fully repaid. Each EMI contains an interest part and a principal part; early EMIs are mostly interest, later ones mostly principal.
How is EMI calculated?
EMI = P × r × (1 + r)^n / ((1 + r)^n − 1), where P is the loan amount, r is the monthly interest rate (annual rate ÷ 12 ÷ 100) and n is the number of monthly instalments.
Does a longer tenure reduce my total cost?
No. A longer tenure lowers the monthly EMI but increases the total interest you pay, often substantially. Choose the shortest tenure whose EMI you can comfortably afford.
Does this EMI include processing fees or insurance?
No. The calculator shows principal and interest only. Processing fees, loan insurance, GST on fees and prepayment charges vary by lender and are extra.
What EMI is affordable on my salary?
Lenders in India typically cap total EMIs at 40–50% of your net monthly income. Many financial planners suggest keeping all EMIs below 30–35% for comfort.
Last updated: 24 September 2026Suggest an improvement · Report a problem