What is Home Loan EMI?

2 min read

EMI (Equated Monthly Instalment) is the monthly payment you make to repay your home loan. Each EMI is made of interest and principal components of varying ratios. If you take a home loan, you’ll pay a part of the principal and interest due every month until the entire loan is cleared in full.

Formula for calculating Home Loan EMI:

Lenders generally use the following Home loan EMI calculation formula:

EMI = [P x I x (1+I)N] / [(1+I)N-1]

P – The principal i.e. loan amount
I – The interest rate per month
N – Number of instalments

How to calculate Home Loan EMI?

1. Substitute the loan amount, interest rate per month, and number of instalments in the above formula
2. The interest rate per month is calculated by dividing the interest rate per annum by 12
3. Calculate carefully to derive the EMI

Say you require a home loan of Rs.25 lakh for a period of 10 years at an interest rate of 9.5% p.a.; your EMI can be calculated as:

P = Rs.25,00,000
I = 9.5 / (12 x 100) = 0.0079
N = 10 years = 120 months

EMI = [25,00,000 x 0.0079 x (1+0.0079)120 / (1+0.0079)120 -1 = Rs.32329*

*This value does not include the processing fee

Alternatively, you can use our EMI calculator to derive your EMIs in a few moments. All you have to do is input the principal, interest rate, and tenor into the digital calculator to view the EMI value.

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