Home Loan Calculation in Pakistan: EMI Formula & Worked Examples

The EMI formula

Both calculators use the standard reducing-balance formula. P is the amount borrowed, r is the monthly interest rate (annual rate ÷ 12 ÷ 100) and n is the number of monthly payments:

1. Monthly payment = P × r × (1+r)^n ÷ ((1+r)^n − 1).
2. Total payment = monthly payment × n.
3. Total interest = total payment − P.

For a home loan, P is not the home price — it is the home price minus your down payment. For an EMI loan, P is the full amount you borrow.

Worked example 1: EMI loan (personal, car, bike)

A loan of Rs 2,000,000 at 22% annual interest for 5 years (60 months). The monthly rate is 22 ÷ 12 ÷ 100 = 0.018333:

• Monthly EMI = Rs 55,238.
• Total payment = Rs 3,314,269.
• Total interest = Rs 1,314,269 — more than half the loan amount again.

That last line is the lesson: a longer tenure lowers the monthly EMI but raises the total interest. Always compare total interest, not just the monthly figure.

Worked example 2: home loan

A home priced at Rs 10,000,000 with a 20% down payment means a loan of Rs 8,000,000. At 12% annual interest over 20 years (240 months):

• Loan amount = Rs 10,000,000 − 20% = Rs 8,000,000.
• Monthly payment (principal + interest) = Rs 88,087.
• Total interest = Rs 13,140,854.
• Total paid = Rs 21,140,854.

A bigger down payment is the single most powerful lever: it cuts the loan amount, the monthly payment and the total interest all at once.

EMI vs home loan — which calculator?

• EMI Calculator: personal loans, car loans, bike qist — you borrow the full amount directly.
• Home Loan Calculator: buying a house — it starts from the home price and subtracts your down payment first.

Assumptions behind these figures

• Both examples use the calculators' own default inputs, as of October 2026.
• Payments cover principal and interest only. Property taxes, insurance, bank processing fees and registration costs are not included.
• Rates are examples, not quotes. Home loan and EMI rates in Pakistan vary by bank, by fixed vs variable rate, and by the applicant's income and documents.

Common mistakes

1. Comparing loans by monthly EMI alone. Compare total payment and total interest across tenures before you choose.
2. Forgetting the extra costs of buying a house. Registration, transfer taxes, moving and furnishing sit on top of the loan.
3. Borrowing the maximum the bank offers. Borrow what your monthly budget can carry, not the ceiling of your eligibility.
4. Treating an example rate as a bank offer. Confirm the exact rate, fees and schedule with your bank before signing anything.

Source and date note

The figures in this guide are the calculators' own outputs for their default inputs, as of October 2026. No bank rate is quoted anywhere on this page, because bank rates change and differ by applicant — confirm the current rate with your bank. This guide is general information only, not financial advice.