To calculate a home loan EMI you need exactly three inputs: the loan amount (P), the annual interest rate, and the tenure in years. Everything else — total interest, the amortization schedule, the closing date — is derived from those three.
The formula. EMI = P × r × (1+r)ⁿ / ((1+r)ⁿ − 1)
- P = principal, the sanctioned loan amount (not the property price).
- r = the monthly rate, which is the annual rate ÷ 12 ÷ 100. An 8.5% annual rate is 0.0070833 per month, not 8.5.
- n = tenure in months. A 20-year loan is 240, not 20.
Getting r and n into monthly units is the single most common mistake. Feed in 8.5 and 20 instead of 0.0070833 and 240 and the answer will be nonsense.
Step by step, on a real number. ₹30,00,000 at 8.5% for 20 years:
- Monthly rate r = 8.5 ÷ 12 ÷ 100 = 0.00708333
- Months n = 20 × 12 = 240
- (1+r)ⁿ = 1.00708333^240 = 5.4463
- Numerator = 30,00,000 × 0.00708333 × 5.4463 = 1,15,733
- Denominator = 5.4463 − 1 = 4.4463
- EMI = 1,15,733 ÷ 4.4463 = ₹26,030 (rounding to the rupee; lenders round slightly differently)
Over 240 months you pay about ₹62.5 lakh in total — roughly ₹32.5 lakh of it interest.
In Excel or Google Sheets. Use PMT, which implements the same formula:
`=PMT(8.5/12/100, 20*12, -3000000)`
The principal is entered as a negative number so the result comes back positive. `IPMT` and `PPMT` with the same arguments give you the interest and principal parts of any specific month, which is how you build an amortization table by hand.
The three inputs people get wrong
- Property price instead of loan amount. Banks fund 75–90% of value. On a ₹40 lakh flat with a 20% down payment, P is ₹32 lakh, not ₹40 lakh.
- Headline rate instead of your rate. Advertised rates are for the best credit profiles. A 750+ CIBIL score, a woman co-applicant and a salary account with the lender each move the offered rate; a 700 score can cost 25–75 basis points.
- Ignoring the one-time costs. Processing fee (0.25–1% + GST), legal and valuation charges, stamp duty and registration are paid outside the EMI. They do not change the EMI but they very much change what the loan costs you.
What the formula does not tell you. It assumes a fixed rate for the whole tenure. Almost every Indian home loan is floating and repo-linked, so when the repo rate moves, your lender usually keeps the EMI constant and changes the tenure instead. That means the "240 months" in your calculation is an estimate, not a contract — recheck your outstanding tenure after every rate cycle.
Rather not do the arithmetic? The Home Loan EMI Calculator runs the same formula and also shows the month-by-month interest-vs-principal split, and the Amortization Schedule prints the full table you would otherwise build in Excel.