How a home loan EMI works: tenure, interest and down payment

This is general information, not financial advice. Loan terms differ by lender. Read your own loan documents and ask the lender to explain anything unclear.

An EMI, or equated monthly instalment, is the fixed amount you pay your lender each month until the loan is cleared. Every EMI is part interest and part repayment of the amount you borrowed.

What decides the EMI

• The loan amount: the price of the home minus your down payment.
• The interest rate: the lender's charge for lending you the money.
• The tenure: how many months or years you take to repay.

How the three interact

• A larger down payment means a smaller loan, so a smaller EMI and less interest paid overall.
• A longer tenure lowers each EMI but usually means you pay more interest in total.
• A shorter tenure raises each EMI but clears the loan sooner and costs less interest in total.

Early in the loan, most of the EMI is interest

In the first years, a larger share of each EMI goes to interest, and the share going to repayment grows later. This is why paying a little extra early can shorten the loan, if your lender allows part-payments. Ask about any charges for doing so.

Work out your own numbers

Try the EMI calculator to see how tenure and rate change your payment, the down payment calculator to plan your upfront cost, and the home loan eligibility calculator for a rough idea of what a lender may offer.