Home Loan EMI Calculator

Why ₹50 lakh at 8.5% for 20 years costs ₹43,391 a month

An EMI — equated monthly instalment — stays the same every month, but what it pays for changes. Interest is charged each month on the principal still outstanding, at the annual rate divided by 12, and the rest of the EMI reduces the principal. This is the monthly reducing balance method every Indian bank uses for home loans.

For ₹50,00,000 at 8.5% over 240 months, the monthly rate is 0.7083% and the formula gives an EMI of ₹43,391.16. In the first month, ₹35,416.67 of that is interest and only ₹7,974.50 repays the loan. Over the full 20 years you pay ₹1,04,13,879: the ₹50 lakh you borrowed plus ₹54,13,879 of interest — more than the loan itself.

For the first 12 years most of every EMI is interest

In year 1 of the example you pay ₹5,20,694 in EMIs: ₹4,21,182 of interest and ₹99,511 of principal. The balance falls slowly at first, because interest is charged on nearly the whole loan. By year 10, ₹3,07,420 of that year’s EMIs is still interest and ₹34,99,691 remains outstanding. Principal repayment only overtakes interest in year 13.

That shape is why tenure matters so much. The same ₹50 lakh at 8.5% costs ₹49,237 a month over 15 years with ₹38,62,656 of interest, ₹40,261 over 25 years with ₹70,78,406, and ₹38,446 over 30 years with ₹88,40,443. Stretching from 20 to 30 years lowers the EMI by under ₹5,000 but adds about ₹34 lakh of interest. The year-by-year schedule below the calculator shows the split for your own loan.

Prepaying ₹1 lakh a year saves ₹18.55 lakh — if you keep the EMI the same

A prepayment goes straight to principal, so every later EMI carries less interest. Banks then give you a choice: keep the EMI and finish the loan sooner, or keep the end date and lower the EMI. The calculator models both, with the prepayment made at the end of each loan year.

On the example loan, prepaying ₹1 lakh every year from year 1 and keeping the EMI at ₹43,391 ends the loan 6 years early and saves ₹18,55,389 of interest. Using the same prepayments to lower the EMI instead saves ₹9,58,553; the EMI drops to ₹42,506 after the first prepayment and keeps falling. Shortening the tenure almost always saves more, because the higher EMI keeps attacking the principal.

Prepayment on a floating-rate home loan should cost you nothing. The RBI has long barred foreclosure charges and prepayment penalties on floating-rate term loans to individuals, and its Pre-payment Charges on Loans Directions, 2025 confirm it for loans sanctioned or renewed from 1 January 2026, whether you prepay in part or in full and from any source. Fixed-rate loans can still carry a charge; check your sanction letter.

On a ₹50 lakh loan the bank can lend at most 80% of the property’s value

The RBI caps how much of a home’s value a bank may lend, and the cap tightens as the loan grows. Loans up to ₹30 lakh can go to 90% of the value, loans above ₹30 lakh and up to ₹75 lakh to 80%, and loans above ₹75 lakh to 75%. The rest is your own contribution, before stamp duty and registration, which banks normally exclude from the value.

The example’s ₹50 lakh loan on a ₹65 lakh property is 76.9% of the value, inside the 80% cap. On a ₹60 lakh property the same loan would be 83.3%, and the bank would lend no more than ₹48 lakh. The calculator warns when your loan is above the cap for its size.

• Loan up to ₹30 lakh — up to 90% of the property value
• Above ₹30 lakh to ₹75 lakh — up to 80%
• Above ₹75 lakh — up to 75%

At a 30% slab the old regime is worth ₹93,448 in year 1 on this loan

Under the old tax regime, interest on a loan for a self-occupied home is deductible up to ₹2 lakh a year, and principal repaid counts towards the ₹1.5 lakh limit that the Income-tax Act, 1961 gave under section 80C — a limit shared with PF, ELSS, life insurance and other items. The Income-tax Act, 2025, which applies from the 2026-27 tax year, keeps the ₹2 lakh interest limit in its section 22. The new regime, now the default, allows neither deduction for a self-occupied home.

In year 1 of the example, interest is ₹4,21,182, so the deduction stops at ₹2,00,000; principal is ₹99,511, all of it inside the ₹1.5 lakh limit if nothing else uses it. At a 30% slab plus 4% cess that is ₹93,448 of tax saved, and at 20% it is ₹62,298. Whether the old regime wins overall depends on your other deductions, so compare both regimes on your full income before you choose.

Rate resets, fees and stamp duty sit outside the EMI

Most new floating-rate home loans are linked to an external benchmark, usually the RBI repo rate, so the rate — and either your EMI or your tenure — changes when the benchmark moves. The calculator holds the rate you enter for the whole loan; rerun it at a new rate to see the effect of a reset.

Processing fees, property insurance sold with the loan, stamp duty and registration charges are all paid on top of the EMI. Your bank’s Key Facts Statement lists the annual percentage rate, which includes those fees, along with the repayment schedule; treat it, and the sanction letter, as the final word rather than this estimate.

Worked example

A ₹50 lakh home loan at 8.5% for 20 years on a ₹65 lakh property.

Limitations

• The rate is held constant; floating rates reset with the lender’s benchmark over the life of the loan.
• Processing fees, insurance bundled with the loan, stamp duty and registration are not included.
• The tax estimate covers a self-occupied home in year 1 only, and ignores surcharge and other 80C items.

Frequently Asked Questions

Sources & References

Figures on this page are checked against primary, authoritative sources. Links open in a new tab.

• Reserve Bank of India (Pre-payment Charges on Loans) Directions, 2025Reserve Bank of India · verified 2026-09-22
• Master Circular — Housing FinanceReserve Bank of India · verified 2026-09-22
• FAQs on the new and old tax regimesIncome Tax Department, Government of India · verified 2026-09-22
• Key Facts Statement for loans and advancesReserve Bank of India · verified 2026-09-22

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