1. What is the EMI Formula?

The EMI (Equated Monthly Installment) formula calculates the fixed payment amount a borrower makes to a lender at a specified date each calendar month. It's commonly used for house loans in the USA.

2. How Does the Calculator Work?

The calculator uses the EMI formula:

Where:

• \( P \) — Principal loan amount (USD)
• \( r \) — Monthly interest rate (annual rate divided by 12, in decimal)
• \( n \) — Number of monthly payments (loan term in years × 12)
• \( PMT \) — Monthly payment amount (USD)

Explanation: The formula accounts for both principal repayment and interest payment components of the EMI.

3. Importance of EMI Calculation

Details: Calculating EMI helps borrowers understand their monthly financial commitment, compare loan offers, and plan their budget accordingly.

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 is included in the EMI payment?
A: EMI includes both principal repayment and interest payment for that month, though the proportion changes over time.

Q2: How does loan term affect EMI?
A: Longer terms reduce EMI but increase total interest paid. Shorter terms increase EMI but reduce total interest.

Q3: Are there other costs besides EMI?
A: Yes, there may be property taxes, insurance, and maintenance costs not included in the EMI calculation.

Q4: How accurate is this calculator?
A: It provides standard EMI calculation but actual loan terms may vary based on lender policies and fees.

Q5: Can I prepay my home loan?
A: Most US lenders allow prepayment, which can reduce total interest, but some may charge prepayment penalties.