Mortgage & Home Loan Calculator
📜 Mortgage methodology note
EMI math uses the standard amortization formula on reducing balance — the method used by Indian housing lenders and US fixed-rate mortgages alike. Indian borrowers: home-loan interest qualifies for Section 24(b) deduction (old regime); cross-check with the income tax calculator. Last verified: June 2026.
📊 Methodology: This calculator uses standard financial formulas. Results are estimates for planning purposes only. Consult a qualified financial advisor before making financial decisions.
How Mortgage Payments Work
A mortgage payment covers both principal (the amount borrowed) and interest (the cost of borrowing). Early payments are mostly interest, while later payments go more toward principal. — also see our auto loan calculator. Related: use the Mortgage Payoff Calculator to go further, or the Amortization Calculator for a different angle.
Mortgage Formula
M = P[r(1+r)^n] / [(1+r)^n - 1] where M is monthly payment, P is principal, r is monthly rate, and n is total payments.
How to Save on Your Mortgage
A larger down payment reduces your loan amount and eliminates PMI. Choosing a 15-year term over 30-year saves significant interest. Even one extra payment per year can cut years off your mortgage.
Look beyond the monthly mortgage payment
A mortgage payment estimate is helpful, but the real cost of home ownership may also include taxes, insurance, maintenance, association charges, and future rate changes. Always compare the calculator result with the complete loan offer from the lender.
What should you know before using this tool?
The Mortgage Calculator is built for people who want a fast answer without losing context. It keeps the calculation simple, shows the result clearly, and helps you understand what the number means before you use it in a real decision.
This calculator helps you understand borrowing costs before you commit. It can show how rate, term, loan amount, and extra payments affect monthly payments and total interest.
How mortgage payments are calculated
A mortgage is a secured loan where the property being purchased serves as collateral. Monthly mortgage payments are calculated using the same EMI formula used for any amortising loan, applied to the principal loan amount at the agreed interest rate over the loan term.
Monthly Payment Formula: M = P × [R(1+R)^N] ÷ [(1+R)^N – 1]
- M = Monthly payment
- P = Principal loan amount
- R = Monthly interest rate (Annual rate ÷ 12 ÷ 100)
- N = Total number of payments (years × 12)
Example: Home loan of $400,000 at 8.5% annual interest for 20 years: R = 0.007083, N = 240. Monthly payment = $3,471. Total repaid over 20 years = $833,110. Total interest = $433,110.
Down payment and loan-to-value ratio
Most global banks require a minimum down payment of 10–20% of the property value. The remaining 80–90% is financed through the home loan. This ratio is called the Loan-to-Value (LTV) ratio. A lower LTV (larger down payment) typically results in a lower interest rate and smaller loan amount, reducing both monthly EMI and total interest.
- Property value $6,000,000 with 20% down payment ($1,200,000): Loan = $4,800,000
- Same property with 10% down payment ($600,000): Loan = $5,400,000
- The larger down payment saves $600,000 in principal, reducing monthly EMI and saving approximately $6–8 hundred thousand in interest over 20 years
Fixed vs floating home loan rates
- Fixed rate: Rate stays constant for the entire tenure or a fixed period (typically 2–5 years). Predictable EMI but usually 0.5–1% higher than floating at time of origination
- Floating rate: Linked to benchmark lending rate or benchmark lending rate (Repo Rate Linked Lending Rate). Changes with central bank policy rate decisions. Currently, most home loans are floating rate
Floating rate loans benefit when central bank cuts rates and cost more when central bank raises rates. Given the historical rate cycle, floating rates have generally been advantageous for long-tenure borrowers over 15–20 year periods.
How prepayment reduces total interest
Making additional payments toward the principal is one of the most effective ways to reduce total interest on a home loan. Most home loans allow prepayment without penalty (especially floating rate loans).
Example: $4,000,000 loan at 8.5% for 20 years (EMI = $34,694):
- Without prepayment: Total interest = $4,326,560 over 20 years
- With $100,000 prepayment in year 2: Saves approximately $280,000 in interest and closes the loan ~10 months early
- With $5,000 extra monthly from start: Saves approximately $1,200,000 in interest and closes 5 years early
Tax benefits on home loans
- retirement/savings deduction: Principal repayment up to $150,000 per year is deductible from taxable income
- mortgage interest deduction: Interest paid on home loan up to $200,000 per year is deductible (for self-occupied property)
- first-time homebuyer deduction: Additional $150,000 deduction on interest for first-time home buyers (subject to property value conditions)
Down payment impact: how much does 10% vs 20% affect your EMI?
On a ₹60 lakh property at 9% for 20 years: with 10% down (₹54L loan), EMI = ₹48,594. With 20% down (₹48L loan), EMI = ₹43,194. The ₹6 lakh extra down payment saves ₹5,400/month and ₹12.96 lakhs in total interest. But if that ₹6 lakh invested in equity SIP returns 12%, it grows to ₹65+ lakhs in 20 years — making a lower down payment financially sensible if cash flow allows.
Home loan tax benefits: Section 80C and Section 24(b)
Indian home loan borrowers can claim: (1) Principal repayment under Section 80C up to ₹1.5 lakh/year; (2) Interest paid under Section 24(b) up to ₹2 lakh/year for self-occupied property (unlimited deduction for let-out property under the old tax regime). Under the new tax regime from FY 2024-25, Section 24(b) interest deduction for self-occupied property is not available — old regime may be better for high-loan borrowers.
Disclaimer: This calculator provides estimates for educational purposes only and does not constitute financial advice. Results may vary based on actual rates, fees, and conditions. Always consult a qualified financial advisor or official government resources before making financial decisions. View our calculation methodology.
Frequently asked questions about mortgages
What credit score is needed for a home loan? Most banks require a minimum credit score of 650–700 for home loan approval. Scores above 750 qualify for the best interest rates. A score below 600 typically results in rejection or very high rates.
Can I get a home loan with an existing loan? Yes, but your total EMI obligations (existing + new) should not exceed 40–50% of your monthly income. Lenders use Fixed Obligation to Income Ratio (FOIR) to assess this.
What is the maximum home loan tenure? Most global banks offer up to 30 years tenure. The tenure is limited by the borrower's age at loan maturity — most lenders require the loan to close before age 60–70.
Should I choose a shorter or longer mortgage tenure? Shorter tenure: higher EMI, less total interest, faster debt freedom. Longer tenure: lower EMI, more total interest, better monthly cash flow. Choose the shortest tenure where the EMI remains comfortably within 35–40% of your monthly income.
Sources & References
- NHB — National Housing Bank (India) — Home loan regulations and amortization standards for Indian housing finance
- CFPB — Mortgage Key Terms — Standard mortgage amortization and APR methodology
Monthly payment on a $300,000 mortgage at different rates
| Interest Rate | 15-Year Payment | 30-Year Payment | 30yr Total Interest |
|---|---|---|---|
| 5.0% | $2,372 | $1,610 | $279,767 |
| 5.5% | $2,451 | $1,703 | $313,212 |
| 6.0% | $2,532 | $1,799 | $347,515 |
| 6.5% | $2,613 | $1,896 | $382,633 |
| 7.0% | $2,696 | $1,996 | $418,527 |
| 7.5% | $2,781 | $2,098 | $455,155 |
| 8.0% | $2,866 | $2,201 | $492,516 |
How much house can I afford? (28% income rule)
| Gross Annual Income | Max Monthly Payment | Max Loan (at 7%) | Max Home Price (20% down) |
|---|---|---|---|
| $60,000 | $1,400 | ~$210,000 | ~$262,500 |
| $80,000 | $1,867 | ~$280,000 | ~$350,000 |
| $100,000 | $2,333 | ~$350,000 | ~$437,500 |
| $150,000 | $3,500 | ~$525,000 | ~$656,250 |
| $200,000 | $4,667 | ~$700,000 | ~$875,000 |