Floating vs Fixed Rate Calculator

What is the difference between floating and fixed rate home loans?

A floating rate home loan adjusts its interest rate whenever the RBI changes the repo rate. A fixed rate home loan locks the rate for the full tenure, so the EMI never changes.

Since October 2019, all new floating rate home loans from banks are linked to the RBI repo rate via the RLLR (Repo Linked Lending Rate), per RBI guidelines. Fixed rate products, by contrast, are priced higher upfront because the lender takes on the risk of future rate changes.

The key tradeoff: floating gives a lower starting rate but EMI uncertainty; fixed gives a higher rate but certainty. Use the Home Loan EMI Calculator to model the EMI for any specific rate, then come back here to compare total cost.

How floating rate home loans work in India

Floating rate home loans in India work by tying the interest rate to the RBI repo rate via the bank's RLLR. When the RBI announces a rate change in its bi-monthly Monetary Policy Committee meeting, the bank must adjust its RLLR within 3 months and recalculate your EMI.

Your EMI is recalculated on the reset date using the outstanding balance at that point, the new rate, and the remaining tenure. If the rate rises, the EMI rises. If the rate falls, the EMI falls.

The RBI cut the repo rate from 6.50% to 5.25% through 2025, reducing floating rate EMIs significantly. A borrower with a Rs 75 lakh, 20-year loan who started at 8.5% would have seen the rate drop to approximately 7.25% by end-2025, saving roughly Rs 4,500 per month in EMI.

Current home loan interest rates: floating vs fixed

As of July 2026, floating home loan rates start at 7.15% from Punjab National Bank and Bank of Baroda for prime salaried borrowers, following the RBI repo rate at 5.25%.

When floating rate is better than fixed rate

Floating rate wins when the RBI is in a rate-cutting cycle or rates stay stable at current levels for the bulk of your loan tenure.

Four specific scenarios where floating consistently outperforms fixed:

• Rates are at a cycle peak: if the repo rate is near its historical high, cuts are more likely than hikes, so floating benefits.
• You plan to prepay: floating rate loans carry zero prepayment penalty per RBI guidelines, so aggressive prepayment is cost-free.
• Short to medium tenure (under 10 years): less time for rate volatility to compound against you.
• The fixed premium is large: if fixed is 2% or more above floating, the rate needs to rise significantly before fixed becomes worth it.

When fixed rate is better than floating rate

Fixed rate wins when rates are expected to rise sharply or when EMI certainty is essential for your household budget.

Three scenarios that favor fixed:

• Rates are at a cycle trough: when the repo rate is historically low, a rate hike cycle makes fixed look attractive.
• Tight monthly budget: you cannot absorb an EMI increase of Rs 2,000 to 5,000 per month if rates rise.
• The fixed premium is small: if fixed is only 0.5% above floating, even a modest rate rise makes fixed cheaper overall.

How the RBI repo rate affects floating rate home loans

The RBI repo rate is the rate at which the RBI lends to commercial banks overnight. It is the base of all floating rate home loan pricing in India since 2019.

Each time the RBI's Monetary Policy Committee changes the repo rate, your bank must reset its RLLR within 3 months per RBI guidelines issued under the External Benchmark-Based Lending Rate (EBLR) framework. This reset is applied to the outstanding balance at the reset date.

The RBI cut the repo rate from 6.50% to 5.25% through 2025. A borrower who started at 8.5% in early 2025 would have the rate drop to approximately 7.25% by year-end, reducing a Rs 75 lakh, 20-year EMI from roughly Rs 65,608 to Rs 60,012.

Can I switch from fixed to floating rate?

Yes. Most Indian lenders allow conversion from fixed to floating for a one-time fee of 0.5 to 1% of the outstanding principal. The reverse switch (floating to fixed) is permitted but rare and typically costs a similar fee.

The conversion makes sense when the rate difference after the fee recovers within a reasonable period. For a Rs 50 lakh outstanding loan, a 1% conversion fee is Rs 50,000. If moving from fixed 9.5% to floating 7.5% saves Rs 8,000 per month in EMI, the break-even is about 6 months.

Use the Balance Transfer Savings Calculator to compute net savings after accounting for conversion or transfer fees.

Break-even analysis: at what rate does fixed become worth it?

The break-even rate is the floating rate after year 3 at which total interest paid on the floating loan equals total interest on the fixed loan. Below the break-even rate, floating wins. Above it, fixed wins.

For a Rs 75 lakh loan at 8.5% floating (rising to 9.5% after year 3) vs 9.25% fixed over 20 years, the break-even future rate is approximately 9.9%. If you believe the floating rate after year 3 will stay below 9.9%, floating is the better choice.

This calculator computes the exact break-even future rate for your inputs in real time. It uses binary search to find the rate at which total floating interest equals total fixed interest, accurate to 2 decimal places.

Worked example: Rs 75 lakh loan comparison

Consider a Rs 75 lakh home loan over 20 years (240 months), with a floating rate of 8.5% for the first 3 years (36 months) rising to 9.5% thereafter, compared against a 9.25% fixed rate for the full term.

Note: The table above uses approximate rounded values. Use the calculator at the top of this page for exact figures based on your loan amount and rates.

How to use this floating vs fixed rate calculator

Follow these steps to compare your floating and fixed rate home loan scenarios:

1. Set the loan amount: use the slider or click the value to type a precise figure. Range is Rs 10 lakh to Rs 2 crore.
2. Enter floating rate inputs: on the Floating Rate tab, set your current floating rate and the rate you expect after 3 years.
3. Enter the fixed rate: switch to the Fixed Rate tab and set the fixed rate your lender has quoted.
4. Choose the tenure: click a preset (5Y to 30Y) or adjust the slider. The comparison updates instantly.
5. Read the results: the winner badge shows which option saves more and by how much. The break-even rate tells you the exact threshold above which floating becomes more expensive.

Frequently asked questions