How a home loan EMI is calculated
EMI = P × r × (1 + r)ⁿ ÷ ((1 + r)ⁿ − 1)
- P = loan amount (property price − down payment)
- r = annual interest rate ÷ 12 ÷ 100
- n = tenure in months
Example: for a ₹30 lakh loan at 8.5% over 20 years, the EMI is ₹26,035. You pay ₹62.48 lakh in all, of which ₹32.48 lakh is interest. In the very first month, ₹21,250 of the EMI is interest and only ₹4,785 repays the loan.
How much can you borrow? (RBI loan-to-value limits)
Banks cannot lend the full property value. RBI caps the loan-to-value (LTV) ratio by loan size:
| Loan amount | Maximum loan (LTV) | Minimum down payment |
|---|---|---|
| Up to ₹30 lakh | 90% of the property value | 10% |
| ₹30 lakh to ₹75 lakh | 80% | 20% |
| Above ₹75 lakh | 75% | 25% |
Stamp duty and registration charges are usually not part of the property value for LTV, so budget for them separately. The calculator warns you if your loan crosses the limit.
Home loan EMI for ₹50 lakh
| Interest rate | 15 years | 20 years | 25 years | 30 years |
|---|---|---|---|---|
| 8% | ₹47,783 | ₹41,822 | ₹38,591 | ₹36,688 |
| 8.5% | ₹49,237 | ₹43,391 | ₹40,261 | ₹38,446 |
| 9% | ₹50,713 | ₹44,986 | ₹41,960 | ₹40,231 |
| 9.5% | ₹52,211 | ₹46,607 | ₹43,685 | ₹42,043 |
Tenure matters as much as the rate. A ₹30 lakh loan at 8.5% costs ₹23.18 lakh in interest over 15 years, ₹32.48 lakh over 20 years and ₹42.47 lakh over 25 years.
Tax benefits on a home loan
Under the old tax regime, a home loan on a self-occupied house gives two deductions every year:
- Section 24(b): interest paid, up to ₹2 lakh a year.
- Section 80C: principal repaid, within the overall ₹1.5 lakh 80C limit (shared with PF, PPF, ELSS and so on). Stamp duty and registration also count in the year you pay them.
Example: on a ₹40 lakh loan at 8.5% for 20 years, the first year's interest is about ₹3.37 lakh and the principal about ₹79,600 — so you could claim ₹2 lakh under 24(b) and ₹79,600 under 80C.
Tips to save on your home loan
- Prepay early. Interest is front-loaded, so prepayments in the first years save the most. Floating-rate home loans to individuals have no prepayment penalty.
- Increase your EMI with your salary. Even a 5% higher EMI each year can cut years off the loan.
- Watch your rate. If your bank's rate is well above what new customers get, ask for a conversion or consider a balance transfer.
- Keep the EMI affordable. Lenders typically allow total EMIs of up to 50–60% of net monthly income; keeping it near 40% leaves room for emergencies.
Frequently asked questions
What is the EMI for a ₹30 lakh home loan for 20 years?
At 8.5% a year the EMI is ₹26,035, with ₹32.48 lakh of total interest. At 8% it is ₹25,093.
How much down payment is needed for a home loan?
At least 10% for loans up to ₹30 lakh, 20% for ₹30–75 lakh and 25% above ₹75 lakh, as per RBI's loan-to-value limits — plus stamp duty and registration.
What is the maximum home loan tenure?
Most banks offer up to 30 years, usually ending by the time you turn 60–70 years old.
Can I claim tax benefits on my home loan?
Under the old regime, yes: up to ₹2 lakh of interest under Section 24(b) and principal under Section 80C (within the ₹1.5 lakh limit). The new regime does not allow these for a self-occupied home.
Do floating rates change my EMI?
When the bank's benchmark rate changes, most banks change the remaining tenure and keep the EMI the same, unless you ask for the EMI to change instead.