One Formula to Calculate Your Mortgage Installment

KPR (Kredit Pemilikan Rumah) is a bank credit facility for buying a house or apartment. In Indonesia, KPR installments are calculated with the annuity method — a fixed monthly payment throughout the loan term, with the interest portion shrinking and the principal portion growing over time.

The formula: Monthly Installment = P × (i/12) / (1 − (1 + i/12)^−n). P is the loan principal (house price minus down payment), i is the annual interest rate, and n is the number of months. This is the formula every online KPR calculator uses.

Simulation: IDR 800 Million House With 20 Percent Down

Take a realistic example: an IDR 800 million house, 20 percent down payment (IDR 160 million), leaving an IDR 640 million loan principal. Promotional fixed rate of 6 percent per year (0.5 percent per month) with a 20-year term, or 240 months.

Plug it into the formula: Installment = 640,000,000 × [0.005 / (1 − (1.005)^−240)] = IDR 4,585,155 per month. In the first month, the composition is IDR 3,200,000 for interest (0.5% × IDR 640 million) and IDR 1,385,155 for principal.

In the second month, the remaining principal drops to IDR 638,614,845, so the interest portion falls to IDR 3,193,074 while the principal portion rises to IDR 1,392,081. The total installment stays the same — that is the annuity principle.

Fixed vs Floating: The Two Phases of KPR Interest

KPR interest generally has two phases. Fixed phase: the rate stays constant for the first 1–5 years, usually 4–8 percent, giving payment certainty. Floating phase: after the fixed period ends, the rate follows the market rate (BI Rate), usually 9–12 percent, so installments can rise or fall.

A longer fixed period is more advantageous because it guarantees payment certainty. Also note the minimum down payment: 10 percent for a first home of small type (≤70 sqm) and 15–20 percent for a second home or larger type.

Term Simulation and How to Choose

The loan term most strongly affects the installment. As an illustration, with an IDR 500 million principal and 5 percent annual rate: a 10-year term yields about IDR 5.303 million per month; 15 years about IDR 3.954 million; and 20 years about IDR 3.3 million.

A longer term does lighten the monthly installment, but the total interest paid until payoff is far larger. An extreme example: an IDR 500 million house with 20 percent down, IDR 400 million loan, 7 percent fixed rate, 20-year term → about IDR 3.1 million per month, yet total interest paid reaches IDR 344 million.

How to choose wisely: make sure the installment does not exceed 30–40 percent of monthly income, keep an emergency fund of 3–6 times monthly expenses, and compare KPR schemes from at least 3–5 banks before signing the credit agreement.