What is a Home Loan?
A home loan is a secured loan where the property you purchase serves as collateral. You borrow a lump sum from a bank or housing finance company (HFC) to buy a house, apartment, or plot, and repay it through EMIs over a fixed tenure — typically up to 30 years.
In India, the home loan market is one of the largest credit segments, with public sector banks (SBI, PNB, BOB) and private lenders (HDFC, ICICI, Kotak) competing aggressively. Interest rates can be fixed or floating, and the EMI is calculated using the reducing-balance method.
How this home loan calculator helps you
Planning to buy a house requires extensive math. This home loan calculator helps you in the following ways:
How home loan EMI is calculated
Banks in India use the reducing-balance method for home loans. The same formula applies whether you borrow from SBI, HDFC, or any other lender:
EMI = [P x R x (1+R)^N] / [(1+R)^N - 1]
Where P is Principal (property price minus down payment), R is monthly interest rate (annual rate divided by 12 divided by 100), and N is the number of monthly instalments (tenure in months).
Factors that affect your home loan EMI
Several factors influence the EMI you pay on a home loan:
Property price
A higher property price means a larger loan, which directly increases your EMI. Consider compromising on size or location if the EMI strains your budget.
Down payment
The more you put down upfront, the less you borrow. Saving a 30–40% down payment instead of the minimum 10% can dramatically reduce your monthly outflow.
Interest rate
Even a 0.25% difference in rate adds up to lakhs over 20 years. Compare offers from multiple lenders and negotiate for the best rate based on your credit score.
Loan tenure
Extending the tenure from 20 to 30 years lowers the EMI by about 10–15% but doubles the total interest paid. Find the tenure where the monthly payment is comfortable without excessive interest.