How to Calculate Your Home Loan EMI Through Various Methods

Figuring out the finances is usually the next step once you have set your eyes on that dream home. Home loans the banks provide help finance the property and mostly cover up to 70%-80% of the house property value. However, once the loan is secured, the bank expects the borrower to pay the fixed Equated Monthly Instalments (EMI) on the loan amount. This amount is usually the interest on the principal amount plus some part of the principal. A home loan EMI calculator is typically used to determine the amount of EMI that needs to be paid to the bank every month.

Some factors affecting the Home Loan EMI Calculation

Multiple factors affect the calculation of the Home Loan EMI. These factors are essential to consider as they may increase and decrease the amount of EMI payable to the bank. All these factors are taken into account by the Home loan EMI calculator. Some factors include:

  • Loan Amount – This is the loan amount sanctioned by the bank in your name. This is usually up to 80% of the property or house value. For example, if the house value is fixed at 20 lakhs, the home loan amount would be up to or below 16 lakhs.
  • Tenure of the loan – This is the period in which the total value of the loan is expected by the bank to be repaid by the borrower. Duration directly affects the amount of EMI payable to the bank.
  • Interest rate – This is a significant factor in any loan. The interest rate determines the monthly or yearly interest that the bank needs to pay on the loan amount. Interest rate is such an important factor that banks and financial institutions often compete to offer the best rates that might attract potential borrowers.

Calculation Methods for Home Loan EMI

Now that you understand the factors influencing the calculation of Home Loan EMI, it’s time to dive into how we can calculate it.

  1. Manual Formula – This basic and simple formula incorporates compound interest. You must put the values in the formula to calculate your EMI. The manual formula is (P*R*(1+R)^N)/(1+R)^N -1).
    1. Here, ‘P’ stands for the principal amount/loan amount
    2. ‘R’ represents the annual interest rate payable on the loan amount divided by 12
    3. And ‘N’ is the number of monthly installments payable on the loan amount
  2. Microsoft Excel – This method is suitable for people comfortable with the know-how of Microsoft excel. The software provides ready-made formulas for calculating the Home Loan EMI. You must use the PMT Fx function in the excel sheet to get the EMI. The formula is PMT (rate, nper, pv, [fv], [type]).
    1. Here, the rate stands for the interest rate on the loan amount
    2. Nper represents the total number of payments to the bank
    3. Pv is the principal amount/loan amount
    4. Fv is the future value which is optional. It is assumed to be zero (0)
    5. Type is optional and represents when the payment is due
  3. Online Home loan EMI calculator – This is the fastest and most feasible way to calculate the amount of EMI on a home loan. Various calculators are available online to quickly feed the information asked to find the EMI. The information asked usually consists of the principal amount, interest rate, and the loan’s tenure.


Home Loan EMI calculation is necessary to ascertain the amount payable as EMI to the bank. The methods mentioned above will help you calculate the EMI easily. Online Home loan EMI calculator is the easiest method. Only after calculating the EMI should you Apply Home Loan. These methods can be used anytime and not just when taking a loan. Once you have the EMI values, you can rest assured and pay the bank.

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