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EMI & loan affordability calculator

Your EMI, the total interest and the year-by-year split between principal and interest — plus the loan size a given share of your income can service.

Your loan

How much loan can I afford?

Not sure? Use the take-home salary calculator.
40% is a common rule of thumb, not advice. Lenders apply their own limits based on income, age and credit history.
Your EMI—
Total interest—
Total you repay—
Interest is—
All your EMIs take up—
Principal
—
Interest
—
Loan your chosen ratio can service—
EMI room at that ratio—

Educational tool with simplified assumptions. Returns are not guaranteed; actual results will differ. This is not investment, tax or legal advice.

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Amortisation

Principal and interest, year by year

YearPrincipalInterestBalance

How it works

The maths, in plain English.

EMI. EMI = P × r × (1 + r)n ÷ ((1 + r)n − 1), where P is the loan, r the yearly rate divided by twelve and n the number of months. Interest is charged each month on the balance still outstanding, so early EMIs are mostly interest and later ones mostly principal — the table shows the split for every year.

Affordability. Income × the ratio you choose, less EMIs you already pay, is the room for a new EMI. The loan that EMI can service is its present value at the same rate and tenure: EMI × (1 − (1 + r)−n) ÷ r.

About the 40%. It is a rule of thumb for keeping total EMIs at a level that leaves room for living costs and saving. It is not advice and not a lender's rule: banks and housing finance companies set their own fixed-obligation limits, which vary with income, age, credit score and the type of loan.

Assumptions. Fixed rate for the whole tenure — most home loans are floating and the EMI or tenure will change when rates do. Monthly rests. Processing fees, insurance and prepayments are ignored. To compare prepaying with investing, use the prepayment vs SIP calculator.

Sources (checked 19 Sep 2026). Standard reducing-balance EMI formula; no regulatory figures are used on this page · The 40% ratio is an assumption you can change

Questions

FAQ

How is EMI calculated?
With the reducing-balance formula: EMI = P × r × (1 + r)^n ÷ ((1 + r)^n − 1), where r is the monthly interest rate and n the number of months. A ₹50 lakh loan at 8.5% for 20 years works out to an EMI of ₹43,391.
How much home loan can I get on my salary?
A quick estimate: decide what share of take-home pay can go to EMIs, subtract existing EMIs, and convert the rest into a loan amount. At ₹1 lakh a month, a 40% ratio and no other EMIs, ₹40,000 a month services about ₹46 lakh at 8.5% over 20 years. Lenders apply their own eligibility rules.
Does a longer tenure reduce the EMI?
Yes, but it raises the total interest sharply. ₹50 lakh at 8.5% costs ₹43,391 a month and ₹54.1 lakh of interest over 20 years; over 30 years the EMI falls to ₹38,446 but the interest rises to ₹88.4 lakh.
What is a reasonable EMI-to-income ratio?
A widely used rule of thumb keeps all EMIs within about 40% of take-home income. It is a guide, not advice — someone with high fixed costs may want less, and lenders use their own limits.
Why is most of my early EMI interest?
Interest is charged on the outstanding balance, which is highest at the start. In the first year of a 20-year loan at 8.5%, about 81% of what you pay is interest; the share falls every year as the balance reduces.
What is the difference between a flat rate and a reducing-balance rate?
A flat rate charges interest on the original loan for the whole tenure; a reducing-balance rate charges it only on what you still owe. The same quoted percentage costs far more on a flat basis. This calculator uses reducing balance, as home, car and most personal loans do.

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