1. What is EMI?

EMI (Equated Monthly Installment) is the fixed payment amount made by a borrower to a lender at a specified date each calendar month. It's used to pay off both interest and principal each month so that over the loan term, the loan is paid off in full.

2. How Does the Calculator Work?

The calculator uses the EMI formula:

Where:

• \( P \) — Principal loan amount (USD)
• \( r \) — Monthly interest rate (annual rate ÷ 12 ÷ 100)
• \( n \) — Loan term in months
• \( PMT \) — Monthly EMI payment (USD)

Explanation: The formula calculates the fixed monthly payment that would pay off the loan with interest over the specified term.

3. Importance of EMI Calculation

Details: Calculating EMI helps borrowers understand their repayment obligations, plan their finances, and compare different loan options before committing to a home loan.

4. Using the Calculator

Tips: Enter the principal amount in USD, annual interest rate in percentage, and loan term in years. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What factors affect my EMI amount?
A: The three main factors are loan amount, interest rate, and loan term. Higher amounts/rates increase EMI, while longer terms reduce EMI but increase total interest.

Q2: How does prepayment affect my EMI?
A: Prepayment reduces principal, which can either lower your EMI or shorten your loan term, depending on the terms of your loan agreement.

Q3: What's the difference between fixed and floating rate EMI?
A: Fixed rate EMI remains constant throughout the term, while floating rate EMI changes when interest rates change.

Q4: How much of my EMI goes toward principal vs interest?
A: Initially, more goes toward interest. Over time, the proportion shifts toward principal repayment (amortization).

Q5: What additional costs should I consider beyond EMI?
A: Consider processing fees, insurance, property taxes, and maintenance costs when budgeting for a home loan.