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Step by step guide on how to calculate home loan EMI


by Mahindra Finance


February 9, 2024


6 mins read

Dreams of owning a home are universal, whether you're currently without one or looking to upgrade. However, the challenges and uncertainties can be overwhelming, especially if you're a first-time homeowner. Thankfully, home loans provide a feasible solution. But before diving into the world of home loans, it's crucial to understand how to calculate your home loan EMIs. By calculating your Equated Monthly Installments or EMIs in advance, you can plan your finances better and ensure that you can manage these monthly payments without any stress. You can use an online housing loan calculator to work out the financial details quickly.

In this step-by-step guide, we'll walk you through the process of calculating your housing loan EMI and help you make informed decisions about your loan repayment.

Why you should use a home loan calculator?

Before availing a home loan, it's important to determine your loan-paying capacity. The EMIs that you'll need to pay consist of two components: the principal loan amount and the interest. The size of the EMI is determined by the repayment tenure you choose. A home loan calculator helps you work out the EMIs for different variables of loan amounts and tenures.

It's important to strike a balance between managing your monthly expenses and minimising the interest outflow over time. By fixing the repayment tenure accordingly, you can choose an EMI that aligns with your financial standing, repayment capacity, and future goals. Let a housing loan calculator help you with calculations.

How to calculate housing loan EMIs

Now that you understand the importance of calculating the EMIs, you may wonder how to calculate home loan EMIs. Let's explore three different methods for calculating home loan EMIs:

1. Mathematical formula

You can use a simple mathematical formula to calculate your EMIs. It requires you to input relevant numbers. The formula is as follows:

EMI = P x R x [{(1 + R)^N} / {1 – (1+R)^N}]


P = Principal Loan Amount

R = Monthly Interest Rate [(Annual Rate/12)/100]

N = Total Number of Months during the Loan Tenure

2. Excel sheet

Another way to calculate your EMI is by using an Excel sheet. The PMT, which stands for payment, function in Excel allows you to calculate the present value of payments. Here's how you can do it:



R = Rate of Interest

NPER = Number of Months

PV = Present Value of the Loan (Principal Amount)

3. Online EMI calculators

Banks and financial institutions usually offer online home loan installment calculators or housing loan calculators that make the calculation process even more convenient. The home loan installment calculator requires you to input the loan amount, interest rate, and tenure, and they provide you with a precise breakup of the loan.

Home loan EMI calculation formula

Let's delve deeper into the mathematical formula for calculating home loan EMIs with an example:

Imagine you took a loan of ₹60 lakhs at an interest rate of 8.50%. The loan tenure is 20 years. Here's how we can calculate their home loan EMI:

R = [(Annual Rate/12)/100] = (8.5/12)/100 = 0.70/100 = 0.0070

N = 240 (loan tenure in months)

EMI = P x R x [{(1 + R)^N}/{1 – (1+R)^N}]

= ₹60,00,000 x 0.00708333 x [{(1 + 0.00708333)^240}/{1-(1 + 0.00708333^240)}]

= ₹52,069

Now you know how to calculate housing loan EMI. By using this formula with accurate inputs, you can easily calculate your home loan EMI.

How to calculate home loan EMI on an Excel sheet?

Using an Excel sheet to calculate your home loan EMI is simple and efficient:

Firstly, gather all the relevant details such as the principal amount, home loan interest rate, and tenure.

Next, open an Excel sheet and enter the formula: =PMT(rate/12, tenure in months, principal amount)". For example:


After entering the formula, press 'Enter' to get the payable EMI value.

How to calculate housing loan EMIs using online calculator?

If you prefer a hassle-free method, online home loan calculators are readily available through various banks and financial institutions. Here's how to calculate your home loan EMIs using a home loan calculator:

  1. Visit the website of your preferred bank or financial institution.
  2. Locate their online housing loan calculator.
  3. Input the loan amount, interest rate, and tenure into the respective fields.
  4. Click on the "Calculate" button to get an accurate breakdown of your loan.

These online housing loan calculators provide a user-friendly experience and enable you to make informed decisions about your home loan.

Benefits of calculating home loan EMI

Calculating your home loan EMI offers numerous benefits:

  1. Flexibility in choosing a suitable loan amount that aligns with your comfort level.
  2. Better management of EMIs to ensure they do not strain your financial balance.
  3. Precise calculations that help you plan additions or subtractions to the principal sum based on your repayment capacity.

By calculating your home loan EMIs in advance, you get a clear understanding of what you're embarking on and can make well-informed decisions regarding your loan repayment.

Wrapping up

Here we are! We set out to understand how to calculate housing loan EMI. When it comes to home loans and managing EMIs effortlessly, a home loan calculator plays an important role. It helps you with necessary calculations to make informed decisions. Use the Mahindra Finance Home Loan Calculator view an instant summary of your EMI repayments.  


1. Can I use the same EMI formula for all types of loans?

Yes, the EMI formula remains the same for most types of loans as it calculates the Equated Monthly Installments based on the principal amount, interest rate, and tenure.

2. Can I change my EMI amount after availing a home loan?

In some cases, you may be able to change your EMI amount after availing a home loan by discussing it with your lender or financial institution. However, this is subject to their policies.

3. Are there any additional charges apart from the principal and interest in EMIs?

Apart from the principal amount and interest component, there may be additional charges such as processing fees or prepayment charges imposed by the lender. It's important to consider these charges while calculating your EMI.

4. How does changing the repayment tenure affect the EMI amount?

Increasing the repayment tenure reduces the EMI amount, but it also leads to a higher interest outflow over time. Similarly, reducing the tenure increases the EMI amount but reduces the overall interest paid.

5. Can I prepay my home loan? Are there any charges for prepayment?

Yes, you can prepay your home loan partially or in full before the completion of the tenure. However, some lenders may levy prepayment charges depending on their terms and conditions.

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