Frequently Asked Questions
What is EMI?+
EMI (Equated Monthly Instalment) is the fixed monthly payment you make to repay a loan. Each EMI has two parts — principal repayment and interest. Early EMIs have more interest, later EMIs have more principal.
How is EMI calculated?+
EMI = P × r × (1+r)^n / ((1+r)^n – 1), where P is the loan amount, r is the monthly interest rate (annual rate ÷ 12 ÷ 100), and n is the tenure in months. This calculator uses the exact same formula.
What is a good EMI to salary ratio?+
Banks typically approve loans where your total EMI outgo is less than 50% of your monthly income. Ideally, keep it under 35-40% to maintain financial flexibility. Many banks use FOIR (Fixed Obligation to Income Ratio) to assess this.
Does prepayment reduce EMI or tenure?+
Most banks offer both options. Reducing tenure saves more interest overall. Reducing EMI gives you more cash flow monthly. Home loan borrowers can claim tax benefits under Section 80C (principal) and Section 24B (interest).
What is the current home loan interest rate in India?+
As of 2025, home loan rates range from 8.35% to 9.5% p.a. depending on the lender and borrower profile. SBI offers from 8.5%, HDFC from 8.65%, and LIC HFL from 8.5%. Rates are linked to RBI repo rate.