Home Loan

Formula to Calculate Home Loan EMI Easily

Individuals planning to purchase a house with a home loan should consider the applicable equated monthly instalments they need to pay throughout the loan’s repayment tenor. 

Hence, before applying for a home loan, one should always calculate the payable EMIs and interest rates. Ergo, this article discusses how to calculate home loan EMI easily.

Know how to calculate home loan EMI easily

Manual EMI calculation has ample room for human error, thus, home loan applicants can use a home loan EMI calculator and avoid such complicated, lengthy calculations.

Here are 5 simple steps for using a home loan EMI calculator:

Step 1: Navigate to the ‘Home Loan’ webpage.

Step 2: Open the ‘House EMI Calculator’.

Step 3: Provide the loan or principal amount.

Step 4: Choose the loan repayment tenor.

Step 5: Input the home loan interest rate.

The calculator displays the resulting EMI upon entering the above details.

Calculate home loan interest and EMI mathematically

The mathematical formula for calculating the interest rate and EMI of a home loan is as follows:

EMI = [P x R x (1 + R) ^ N] / [(1 + R) ^ N – 1]


    • EMI: Equated monthly instalments
    • P: Principal amount, also known as the loan amount
    • R: Rate of interest per month, which is acquired by dividing the annual interest rate by 12
  • N: Loan repayment tenor in months

For example:

If an individual applies for a home loan of Rs.20,00,000 for a repayment tenor of 10 years, at a yearly interest rate of 5%, then:

  • P = Rs.20,00,000
  • R = 0.05 / 12 = 0.004
  • N = 10 x 12 = 120 months

Therefore, EMI = [2000000 x 0.004 x (1 + 0.004) 120] / [(1 + 0.004) 120 -1] = Rs.21,213.

Ergo, the total payable amount = 21213 x 120 = Rs.25,45,560.


  • Rs.5,45,560 is the payable interest
  • Rs.20,00,000 is the principal amount

3 factors affecting home loan interest rate and EMI?

The following are the 3 factors that affect home loan interest rates and EMIs:

  • Type of loan interest rate

The interest rate is the cost of obtaining a home loan and pertains to the repayments that borrowers must make. It is proportional to the payable EMIs. As a result, higher interest rates result in higher EMIs.

  • Principal or loan amount

The principal amount is the total loan quantum borrowers receive upon home loan approval. It is also proportional to the payable EMIs. As a result, a bigger principal amount results in higher EMIs.

  • Loan repayment tenor

It is the time frame in which borrowers must return their whole home loan amount, including interest and principal. Being inversely proportional to payable EMIs, longer repayment tenors result in reduced EMIs.

Top 4 advantages of using a home loan EMI calculator?

The home loan EMI calculator is a free and easily accessible internet tool that everyone can use. The 5 major advantages of using a home loan EMI calculator are as follows:

  1. This online tool gives instantaneous and accurate computational results every single time.
  2. Being an online tool, the home loan EMI calculator can be used from any device at any time.
  3. Borrowers can continue to change the loan amount and repayment tenor as many times as needed, to attain a desirable EMI.
  4. This calculator helps borrowers plan their repayment schedule more efficiently and gives them a clearer idea of their repayment capabilities.

Home loan applicants can also use a home loan eligibility calculator to check whether they fulfil the eligibility requirements, and how well.

Besides, several financial institutions extend pre-approved offers on home loans, loans against property, and other kinds of loans. This simplifies and streamlines the loan application process, and thus, saves time. Individuals can check their pre-approved offers by entering the required details.

With a better understanding of how to calculate home loan EMI easily, loan applicants can better determine the costs they will incur throughout their repayment tenor. Hence, they can make informed financial decisions while creating and maintaining a monthly budget, taking their payable EMIs into account.

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