EMI Calculator

EMI (Equated Monthly Installment) is a fixed monthly payment that covers both the interest accruing on the outstanding loan principal and a portion of the principal itself. Every EMI payment is identical, but the proportion going to interest decreases each month as the principal shrinks.

EMI formula: EMI = P × r × (1 + r)^n ÷ [(1 + r)^n − 1]

Where:

• P = Principal, the original loan amount
• r = Monthly interest rate = Annual Interest Rate ÷ 12 ÷ 100
• n = Loan tenure in months (years × 12)

Total repayment amount: Total Amount = EMI × n

Total interest paid: Total Interest = (EMI × n) − P

What each variable means:

• Principal (P): the total disbursed loan amount; for home loans, this is the sanctioned amount minus any down payment
• Monthly interest rate (r): for an 8% annual rate: r = 8 ÷ 12 ÷ 100 = 0.00667
• Tenure (n): longer tenure means lower EMI but far more interest paid over the life of the loan
• Reducing balance method: EMI is always calculated on the reducing outstanding balance, not the original principal; this is the standard for most bank loans worldwide

EMI composition changes over time:

• Month 1: mostly interest, small principal
• Month 60 (5-year loan): roughly equal interest and principal
• Final month: almost all principal, tiny interest

Reference: EMI for ₹10,00,000 loan at 9% p.a.

• 5-year tenure: EMI ≈ ₹20,758 | Total interest ≈ ₹2,45,480
• 10-year tenure: EMI ≈ ₹12,668 | Total interest ≈ ₹5,20,160
• 20-year tenure: EMI ≈ ₹8,997 | Total interest ≈ ₹11,59,280

Worked example: Home loan: ₹50,00,000. Annual rate: 8.5%. Tenure: 20 years (240 months).

r = 8.5 ÷ 12 ÷ 100 = 0.007083 EMI = 50,00,000 × 0.007083 × (1.007083)^240 ÷ [(1.007083)^240 − 1] = 50,00,000 × 0.007083 × 5.054 ÷ 4.054 = ₹43,391/month

Total paid = ₹43,391 × 240 = ₹1,04,13,840 Total interest = ₹1,04,13,840 − ₹50,00,000 = ₹54,13,840 — more than the original loan.