Home Loan EMI Calculator
Calculate your monthly home loan EMI, total interest payable, and see the principal–interest split. Works with reducing-balance method used by all Indian banks and global lenders.
How Banks Actually Calculate Your Home Loan EMI
Every bank in India — and most lenders worldwide — uses the reducing-balance method to calculate EMI. Interest is charged only on the outstanding principal, not the original loan amount. The EMI itself stays constant, but its internal composition shifts every single month.
- P = loan principal
- r = monthly interest rate (annual rate ÷ 12 ÷ 100)
- n = number of monthly instalments
For ₹50 lakh at 8% over 20 years: r = 0.006667, n = 240 → EMI = ₹41,822. Total paid over 20 years: ₹1.004 crore — meaning interest alone (₹50.4 lakh) slightly exceeds the original loan.
Why your first EMIs barely touch the principal
In month one of that ₹50 lakh loan, interest is ₹50,00,000 × 0.006667 = ₹33,333. Your EMI is ₹41,822, so only ₹8,489 reduces the principal. By year 15, the ratio reverses — most of the EMI repays principal. This is why prepaying in the first 5–7 years saves dramatically more than prepaying later: you're cutting off the interest-heavy phase of the schedule.
The 2026 Interest Rate Landscape
The RBI cut the repo rate four times during 2025, bringing it from 6.50% down to 5.25% — the most aggressive easing cycle since 2019. As of mid-2026 the Monetary Policy Committee has held the rate steady with a neutral stance. The result: home loan rates from public sector banks now start around 7.10–7.25% p.a., the lowest since 2022.
RLLR/EBLR vs MCLR — why your loan type matters
Since October 2019, RBI requires all new floating-rate retail loans to be linked to an external benchmark — usually the repo rate. These are called Repo Linked Lending Rate (RLLR) or External Benchmark Lending Rate (EBLR) loans. They must reset at least once every three months, so repo cuts reach you fast.
Older loans tied to MCLR (Marginal Cost of Funds based Lending Rate) reset only every 6–12 months and depend on the bank's internal cost of funds. If you took your loan before 2020 and your EMI hasn't dropped despite the 125 bps of cuts in 2025, you're likely still on MCLR. Most banks let you switch to EBLR for a nominal fee (₹2,500–5,000) — on a ₹40 lakh balance, even a 0.5% rate difference saves about ₹12 lakh over a remaining 20-year term.
How Much Loan Can You Actually Get? (LTV Rules)
RBI caps the Loan-to-Value ratio based on loan size:
| Loan Amount | Maximum LTV | Your Minimum Down Payment |
|---|---|---|
| Up to ₹30 lakh | 90% | 10% |
| ₹30–75 lakh | 80% | 20% |
| Above ₹75 lakh | 75% | 25% |
Note that LTV is calculated on the bank's assessed property value, which is often 5–10% below the seller's asking price. Stamp duty and registration (another 5–8% depending on state) cannot be financed — budget these separately.
Tax Benefits: Old Regime vs New Regime (Critical 2026 Update)
This is where most online guides are outdated. Since the new tax regime became the default, home loan tax benefits depend entirely on which regime you file under:
| Benefit | Old Regime | New Regime (default) |
|---|---|---|
| Sec 24(b): Interest, self-occupied | Up to ₹2,00,000/yr | Not available |
| Sec 80C: Principal repayment | Up to ₹1,50,000/yr | Not available |
| Interest on let-out property | Full amount* | Full amount* |
| Stamp duty (80C, year of purchase) | Within ₹1.5L limit | Not available |
*Loss from house property set-off against salary is capped at ₹2 lakh per year; the balance carries forward 8 years. Also: construction must finish within 5 years of the financial year the loan was taken, or the self-occupied interest cap drops from ₹2 lakh to just ₹30,000.
Fixed vs Floating in 2026
With the repo rate already down 125 bps and the RBI on a neutral stance, locking a fixed rate now means paying a premium (fixed rates run 1–2% above floating) for protection you may not need. Floating-rate borrowers captured the entire 2025 rate-cut cycle automatically. Fixed makes sense mainly if you're extremely rate-sensitive and expect aggressive hikes — an unlikely scenario in the current cycle. A middle path some banks offer: hybrid loans, fixed for 2–5 years then floating.
Three Levers That Cut Your Total Interest
- One extra EMI per year: On a ₹50 lakh, 20-year, 8% loan, paying a 13th EMI annually closes the loan ~3 years early and saves about ₹8 lakh in interest.
- Tenure cut instead of EMI cut after prepayment: When you prepay, banks offer to either lower your EMI or shorten the tenure. Choosing tenure reduction always saves more — often 2–3× the interest saving.
- Balance transfer when the gap exceeds 0.35–0.50%: RBI prohibits foreclosure charges on floating-rate home loans, so switching costs only processing fees (~0.5%) plus legal/valuation charges. On large balances early in tenure, even a 0.4% rate cut justifies the move.