Home loan example
EMI on a ₹40 lakh home loan
At 8.5% for 20 years, the EMI is ₹34,713 a month. Over the loan you pay ₹43.31 lakh in interest, so the ₹40 lakh costs ₹83.31 lakh in all.
Result
₹34,713
Monthly EMI at 8.5% for 20 years
- Loan amount
- ₹40 L
- Total interest
- ₹43.31 L
- Total you repay
- ₹83.31 L
- Monthly take-home it suits (40% rule)
- ₹86,782
For the first 12 years, most of each EMI goes to interest. From year 13, more of it repays the loan.
Choosing 15 years instead raises the EMI to ₹39,390 but saves ₹12.41 lakh in interest.
EMI on ₹40 lakh by tenure and interest rate
| Tenure | 7.5% | 8% | 8.5% | 9% | 9.5% |
|---|---|---|---|---|---|
| 10 years | ₹47,481 | ₹48,531 | ₹49,594 | ₹50,670 | ₹51,759 |
| 15 years | ₹37,080 | ₹38,226 | ₹39,390 | ₹40,571 | ₹41,769 |
| 20 years | ₹32,224 | ₹33,458 | ₹34,713 | ₹35,989 | ₹37,285 |
| 25 years | ₹29,560 | ₹30,873 | ₹32,209 | ₹33,568 | ₹34,948 |
| 30 years | ₹27,969 | ₹29,351 | ₹30,757 | ₹32,185 | ₹33,634 |
Rates here are illustrative. Your home loan rate depends on the lender, your credit score and, for floating loans, changes in the repo rate.
Where the EMIs go, year by year at 8.5%
| Year | Principal repaid | Interest paid | Balance left |
|---|---|---|---|
| 1 | ₹79,609 | ₹3.37 L | ₹39.20 L |
| 2 | ₹86,646 | ₹3.30 L | ₹38.34 L |
| 3 | ₹94,305 | ₹3.22 L | ₹37.39 L |
| 4 | ₹1.03 L | ₹3.14 L | ₹36.37 L |
| 5 | ₹1.12 L | ₹3.05 L | ₹35.25 L |
| 6 | ₹1.22 L | ₹2.95 L | ₹34.03 L |
| 7 | ₹1.32 L | ₹2.84 L | ₹32.71 L |
| 8 | ₹1.44 L | ₹2.73 L | ₹31.27 L |
| 9 | ₹1.57 L | ₹2.60 L | ₹29.70 L |
| 10 | ₹1.71 L | ₹2.46 L | ₹28 L |
| 11 | ₹1.86 L | ₹2.31 L | ₹26.14 L |
| 12 | ₹2.02 L | ₹2.14 L | ₹24.12 L |
| 13 | ₹2.20 L | ₹1.97 L | ₹21.92 L |
| 14 | ₹2.39 L | ₹1.77 L | ₹19.53 L |
| 15 | ₹2.61 L | ₹1.56 L | ₹16.92 L |
| 16 | ₹2.84 L | ₹1.33 L | ₹14.08 L |
| 17 | ₹3.09 L | ₹1.08 L | ₹11 L |
| 18 | ₹3.36 L | ₹80,581 | ₹7.64 L |
| 19 | ₹3.66 L | ₹50,883 | ₹3.98 L |
| 20 | ₹3.98 L | ₹18,561 | ₹0 |
How this is worked out
An EMI is a fixed monthly payment that covers that month's interest and repays a slice of the loan. The formula is EMI = P × r × (1 + r)^n / ((1 + r)^n − 1), where P is the loan (₹40 lakh), r the monthly rate (8.5% ÷ 12) and n the number of months (240).
Because interest is charged on what is still owed, early EMIs are mostly interest and later ones mostly principal. That is why the balance falls slowly at first, as the year-by-year table shows, and why a prepayment made early saves far more interest than the same amount paid near the end.
Tenure is the biggest lever. A longer loan lowers the EMI but adds years of interest; a shorter one costs more each month and much less overall. The grid above shows the trade at each rate, so you can find the shortest tenure whose EMI still fits your budget.
Lenders usually cap all your EMIs together at around 40 to 50% of take-home pay. At 40%, this EMI suits a take-home income of about ₹86,782 a month, with no other loans.
Frequently asked questions
Results are estimates for education and planning, not financial advice.
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