Home Loan EMI Calculator — How to Apply, Eligibility & Tax Benefits

Buying a home is the single largest financial decision most Indians make. Understanding how your Equated Monthly Instalment (EMI) works, what determines your eligibility, and how to maximise tax benefits can save you lakhs over the loan tenure. This guide covers everything — from the EMI formula to the application process and tax deductions.

How Home Loan EMI Is Calculated

Indian banks use the reducing balance method to calculate home loan interest. This means interest is charged only on the outstanding principal, not the original loan amount. As you pay EMIs, the principal reduces, and so does the interest component — while the principal component increases over time.

The EMI Formula

The standard EMI formula is:

EMI = P × r × (1 + r)^n / [(1 + r)^n – 1]

Where:

• P = Principal loan amount
• r = Monthly interest rate (annual rate ÷ 12 ÷ 100)
• n = Total number of monthly instalments (tenure in years × 12)

Example: For a ₹50 lakh loan at 8.5% annual interest for 20 years:

• r = 8.5 / 12 / 100 = 0.00708
• n = 20 × 12 = 240
• EMI ≈ ₹43,391 per month

Over the 20-year tenure, you would pay approximately ₹54.14 lakh in interest alone — nearly equal to the principal. This is why tenure and interest rate matter enormously.

Factors Affecting Your EMI

Three variables determine your EMI amount:

1. Principal Amount

The higher the loan, the higher the EMI. Most banks finance 75–90% of the property value; you must arrange the rest as a down payment (typically 10–25%).

2. Interest Rate

Even a 0.5% difference in interest rate can save or cost you several lakhs over a long tenure. Interest rates can be fixed (rare in India, usually for an initial period) or floating (linked to the bank's repo-rate-based lending rate).

3. Loan Tenure

Longer tenure means lower EMI but significantly higher total interest paid. A 15-year tenure vs. a 30-year tenure on the same loan can nearly double the total interest outgo.

Tip: Use your bank's online EMI calculator to experiment with different combinations before applying.

Indicative Home Loan Interest Rates

⚠️ Interest rates change frequently based on RBI repo rate decisions and bank policies. The rates below are indicative only — always verify the latest rates directly with your bank before applying.

Your actual rate depends on your CIBIL score, loan amount, employment type, and the property location. Salaried applicants with scores above 750 generally get the best rates.

Eligibility Criteria

Age

• Salaried: 21–60 years (loan must mature before retirement age)
• Self-employed: 25–65 years

Income

• Salaried: Minimum ₹25,000–₹30,000 net monthly income (varies by bank and city)
• Self-employed: Minimum ₹2.5–3 lakh annual net profit (with 3 years of ITR)
• Banks typically allow EMI up to 40–50% of net monthly income (called FOIR — Fixed Obligation to Income Ratio)

CIBIL Score

• 750+: Best rates, quick approval
• 700–749: Approval likely, slightly higher rate
• Below 650: Loan approval is difficult

Not sure about your score? Check our guide on how to check and improve your CIBIL score.

Property Criteria

• Property must have clear title and all approvals
• Must be within municipal/development authority limits
• Builder must be approved by the lending bank (for under-construction property)

Documents Required

For Salaried Applicants

• PAN card and Aadhaar card
• Last 6 months' salary slips
• Last 2 years' Form 16 or ITR
• Last 6 months' bank statements (salary account)
• Employment/appointment letter
• Property documents (agreement, title deed, approved plan, NOC)

For Self-Employed Applicants

• PAN card and Aadhaar card
• Last 3 years' ITR with computation of income
• Last 3 years' audited balance sheet and P&L statement
• Last 12 months' bank statements (business and personal)
• Business registration/license documents
• Property documents

How to Apply for a Home Loan Online

Most major banks now offer fully digital or semi-digital application:

1. Compare rates across 3–4 banks using their online EMI calculators
2. Check eligibility on the bank's website — most have instant eligibility tools
3. Fill the online application on the bank's portal or app (SBI YONO, HDFC Home Loans app, ICICI iMobile)
4. Upload documents — scanned copies of KYC, income, and property documents
5. Receive in-principle approval — typically within 24–72 hours
6. Property verification — the bank conducts legal and technical verification of the property
7. Loan sanction and disbursal — sign the loan agreement, and funds are disbursed (to the builder/seller)

Pro tip: Get an in-principle approval before finalising a property. It strengthens your negotiating position and speeds up the process.

For the property registration process, see our guide on property registration online.

Tax Benefits on Home Loan

Home loans offer significant tax deductions under multiple sections of the Income Tax Act. These benefits apply to the self-occupied property (and differently for let-out property).

Section 24(b) — Interest Deduction

• Deduction on interest paid on the home loan
• Up to ₹2 lakh per year for self-occupied property
• No upper limit for let-out/rented property (full interest is deductible)
• Property must be acquired/constructed within 5 years from the end of the financial year the loan was taken

Section 80C — Principal Repayment

• Deduction on principal repaid during the financial year
• Up to ₹1.5 lakh per year (shared with other 80C investments like PPF, ELSS, etc.)
• Also covers stamp duty and registration charges paid in the year of purchase

Section 80EEA — Additional Interest Deduction

• Additional deduction of up to ₹1.5 lakh on interest for affordable housing
• Conditions: loan sanctioned between 1 April 2019 and 31 March 2022; stamp duty value ≤ ₹45 lakh; borrower owns no other house on the sanction date
• Note: This section's applicability depends on your loan sanction date. Check if you qualify based on when your loan was sanctioned.

Joint Home Loan — Double Benefits

If you take a joint home loan with your spouse (both as co-borrowers and co-owners), each can independently claim:

• ₹2 lakh under Section 24(b)
• ₹1.5 lakh under Section 80C

This effectively doubles the household tax benefit. Ensure both borrowers are also co-owners of the property.

For filing your tax returns with these deductions, refer to our guide on how to file income tax returns online.

Pre-Payment and Foreclosure

Pre-Payment

• Making part-prepayments reduces the outstanding principal, which either reduces your tenure or your EMI
• RBI mandate: Banks cannot charge prepayment penalties on floating rate home loans
• Fixed-rate loans may attract a 2–3% foreclosure charge
• Even small annual prepayments (1–2 extra EMIs per year) can reduce your tenure by several years

Foreclosure (Full Pre-Payment)

• You can close the loan entirely before tenure ends
• No charges on floating-rate loans (RBI rule)
• Request a foreclosure statement from the bank, pay the outstanding amount, and collect your original property documents and NOC

Strategy: In the early years of your loan, the interest component is highest. Prepaying early gives the maximum benefit.

Home Loan Balance Transfer

If another bank offers a significantly lower interest rate, you can transfer your home loan balance:

1. Check the rate difference — a transfer is worthwhile only if the new rate is at least 0.25–0.50% lower and substantial tenure remains
2. Apply to the new bank with your existing loan statement and property documents
3. The new bank conducts its own property valuation and legal check
4. Upon approval, the new bank pays off your old loan directly
5. You continue EMIs with the new bank at the lower rate

Costs to consider: Processing fee, legal/valuation charges, and administrative hassle. Calculate net savings over the remaining tenure before deciding.

Subsidy Under PMAY

First-time homebuyers from economically weaker sections (EWS), lower-income groups (LIG), and middle-income groups (MIG) may be eligible for interest subsidy under the Pradhan Mantri Awas Yojana. The subsidy is credited upfront, reducing your effective loan amount and EMI.

Learn more in our detailed guide on PM Awas Yojana — Gramin & Urban.

Frequently Asked Questions

What is the minimum CIBIL score required for a home loan?

Most banks prefer a CIBIL score of 750 or above for the best interest rates. A score between 700–749 may still get approval but at a slightly higher rate. Below 650, approval is unlikely without a co-applicant with a strong score.

Can I get a home loan with no down payment?

No. RBI regulations require banks to finance a maximum of 75–90% of the property value (depending on loan amount). You must arrange at least 10–25% as a down payment from your own funds.

Is it better to choose a longer or shorter tenure?

A shorter tenure means higher EMIs but significantly lower total interest. A longer tenure keeps EMIs affordable but costs much more overall. Choose the shortest tenure where the EMI fits comfortably within 35–40% of your monthly income.

Can I claim tax benefits on a second home loan?

Yes. For a second self-occupied property, the combined interest deduction under Section 24(b) for both properties is capped at ₹2 lakh. If the second property is let out, the entire interest is deductible with no upper limit, though any resulting loss from house property can only be set off up to ₹2 lakh per year.

What happens if I miss an EMI payment?

Missing an EMI attracts a late payment penalty (typically 1–2% per month on the overdue amount) and negatively impacts your CIBIL score. If you anticipate difficulty, contact your bank proactively — they may offer restructuring, moratorium, or tenure extension.

Can I prepay my home loan without any charges?

Yes, for floating-rate home loans, RBI has mandated that banks cannot charge any prepayment or foreclosure penalty. This applies to both partial prepayments and full foreclosure. Fixed-rate loans may have charges of 2–3%.

How long does it take to get a home loan sanctioned?

Typically 7–15 working days from the date of complete document submission. In-principle or conditional approval can come within 24–72 hours. Property legal and technical verification usually takes the longest.

Key Takeaways

• Home loan EMI is calculated on a reducing balance basis — interest decreases as you repay principal
• Your CIBIL score, income, and age are the primary eligibility factors
• Tax benefits under Section 24(b), 80C, and 80EEA can save you ₹3.5–5 lakh+ per year in taxable income
• Prepay early when possible — it dramatically reduces total interest
• Compare rates across banks and consider balance transfer if rates drop significantly
• Always verify current interest rates directly with your bank before applying