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Mortgage Payments

Monthly mortgage payment:
the EMI formula, step by step

Work out a fixed monthly mortgage payment from the loan amount, annual rate and tenure, then see how a shorter term changes the total.

Calcylator Editorial Team

Updated · 6 min read

The monthly mortgage payment formula

A fixed monthly mortgage payment (EMI) is the loan amount times the monthly rate times (1 + r)^n, divided by (1 + r)^n − 1, where r is the monthly rate and n the number of months. A ₹50,00,000 loan at 8.5% for 20 years comes to ₹43,391.16 a month.

Banks quote the rate per year, but interest is charged monthly. Dividing 8.5 by 1,200 gives a monthly rate of about 0.00708, which is 8.5% split across 12 months and converted from a percentage to a decimal at the same time.

The payment stays the same every month. Early on most of it pays interest; later most of it pays down the loan. The results below are estimates, not financial advice, and your lender's figure may differ with fees or rounding.

Step-by-step calculation

Monthly payment (EMI) =EMI = P × r × (1 + r)^n ÷ ((1 + r)^n − 1)
P:
loan amount (principal) in rupees
r:
monthly rate = annual rate ÷ 1,200
n:
tenure in months
EMI:
fixed monthly payment
The calculator also gives total payment = EMI × months and total interest = total payment − loan amount.

  • Loan amount

    ₹50,00,000

  • Annual interest

    8.5%

  • Tenure

    240 months (20 years)

  • Monthly rate

    8.5 ÷ 1,200

Monthly EMI

₹43,391.16

Total payment ₹1,04,13,878.80, of which ₹54,13,878.80 is interest.

  1. Divide the annual rate by 1,200 to get the monthly rate, which converts the percentage and the 12 months in one step.
  2. Convert the tenure to months: years × 12.
  3. Work out (1 + r) raised to n.
  4. Apply the formula and multiply the EMI by n for the total repaid.

How tenure changes the payment

A shorter loan raises the monthly payment but cuts the total interest sharply. Compare the same ₹50,00,000 at 8.5% over 20 years and over 15 years.

Same loan, two tenures
TenureMonthly EMITotal paymentTotal interest
20 years (240 months)₹43,391.16₹1,04,13,878.80₹54,13,878.80
15 years (180 months)₹49,236.98₹88,62,656.02₹38,62,656.02

To see the split, take month one of the 20 year loan. Interest is ₹50,00,000 × 8.5% ÷ 12 = ₹35,416.67, so only ₹7,974.49 of the ₹43,391.16 payment reduces the loan. That share grows every month as the balance falls.

Paying about ₹5,846 more each month saves roughly ₹15,51,000 in interest here. Whether that is affordable depends on your income and other commitments.

What the formula leaves out

  • Property tax, home insurance and maintenance, which many lenders and buyers add to the monthly cost.
  • Processing fees and other one-off charges.
  • Floating rates, where r changes over time and the payment or tenure is recalculated.
  • Part-payments, which reduce the balance and the interest from that point.

The EMI figure is only the loan repayment, so budget for the extras separately.

The rate matters more than it looks. On the same ₹50,00,000 over 20 years, 8% gives ₹41,822.00 a month and 9% gives ₹44,986.30, a gap of about ₹3,164 every month for 240 months. Trying a few rates and tenures in the calculator before you sign is the cheapest way to see what you can carry.

Common mistakes when calculating payments

  • Using the annual rate as the monthly rate. Divide by 1,200, not 100.
  • Mixing years and months. Tenure in the formula is in months.
  • Comparing loans only by EMI. Check total interest too.
  • Ignoring the down payment. The principal is the loan, not the property price.

Common questions

How do you calculate monthly mortgage payments?

Use EMI = P × r × (1 + r)^n ÷ ((1 + r)^n − 1), with r as the annual rate divided by 1,200 and n in months. For ₹50,00,000 at 8.5% over 240 months, the result is ₹43,391.16 per month.

What is the EMI formula for a home loan?

The EMI formula is P × r × (1 + r)^n ÷ ((1 + r)^n − 1). Here P is the principal, r the monthly interest rate and n the number of monthly instalments. The result is a fixed payment for the entire tenure.

Does the monthly payment include property tax and insurance?

No. The EMI covers only repayment of the loan and its interest. Property tax, insurance and maintenance are separate costs that you should add to your monthly budget when judging how much you can afford.

How does a shorter loan term change the payment?

A shorter term raises the monthly payment but lowers total interest. A ₹50,00,000 loan at 8.5% costs ₹43,391.16 a month over 20 years and ₹49,236.98 over 15 years, saving about ₹15.5 lakh interest.

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