FOIR (Fixed Obligation to Income Ratio) is the proportion of your income lenders allow towards total EMIs. Most Indian banks use 50-55% for higher-income borrowers and 35-45% for lower-income or first-time borrowers.
Worked Examples
If your net monthly income is ₹1,00,000, your existing EMIs total ₹15,000, and the bank uses a 50% FOIR: maximum EMI = (1,00,000 × 0.50) − 15,000 = ₹35,000. At a home loan rate of 8.5% over 20 years, this EMI corresponds to a maximum loan of approximately ₹40.3 lakh.
About the Loan Eligibility Calculator
Before you start looking at houses or cars in India, the most important question is: 'How much will the bank actually lend me?' Once you know your eligibility, use our home loan calculator to turn that figure into an exact EMI and repayment schedule. Walking into a property visit without knowing your eligibility is the easiest way to fall in love with a home that is permanently out of your reach. This loan eligibility calculator uses the exact 'FOIR' logic used by Indian banks to give you a realistic estimate of your borrowing power.
What is FOIR? (Fixed Obligation to Income Ratio)
In the Indian banking system, lenders don't expect you to use your entire salary to pay back a loan. You need money for rent, groceries, and children's education. The FOIR is the percentage of your net take-home pay that the bank allows for all your EMIs combined. For most salaried professionals earning above ₹75,000 per month, banks like SBI, HDFC, or ICICI use a FOIR of 50-55%. If you earn ₹1 Lakh and have no existing loans, the bank will allow a total EMI of ₹50,000. However, if you already have a car EMI of ₹10,000 and a personal loan of ₹5,000, your remaining capacity for a new home loan EMI drops to ₹35,000.
3 Practical Ways to Boost Your Loan Eligibility
1. Add a Co-Applicant: This is the single most effective way to increase your loan amount in India. By adding your spouse or a working parent as a co-applicant, the bank considers both incomes. If you earn ₹1 Lakh and your spouse earns ₹80,000, your combined EMI capacity jumps from ₹50,000 to ₹90,000, nearly doubling your eligibility. Ensure the co-applicant has a good CIBIL score (750+).
2. Extend the Tenure: A longer tenure (like 30 years for a home loan) reduces the monthly EMI for the same principal. Since the bank limits you by the EMI amount, stretching the tenure allows you to borrow more principal today. However, remember that this also increases your total interest cost significantly. Only do this if you plan to prepay the loan as your salary grows.
3. Clear Existing Small Debts: Every existing EMI—whether it's for a car, or even a 'No Cost EMI' on an iPhone—directly reduces your FOIR capacity. Closing a ₹10,000 EMI personal loan before applying for a home loan can increase your eligibility by nearly ₹12-15 Lakh.
The CIBIL Factor
While a high CIBIL score (780+) doesn't directly change the FOIR percentage, it gets you the best interest rate slabs. A lower interest rate means a smaller EMI for the same loan amount, which effectively lets you borrow more within the same EMI cap. Lenders also look at your credit card usage; if you are consistently using 90% of your credit limit, you might be seen as 'credit hungry,' leading to a lower loan amount.
Why Banks May Reject You Despite High Income
Eligibility is not just a math problem. Indian banks also consider:
- Company Listing: Lenders have 'White Lists' of companies (Category A, B, C). Employees of top MNCs and Government bodies get higher eligibility. If you work for a small, unlisted startup, your FOIR might be capped at 40%.
- Age vs Tenure: If you are 45, you won't get a 20-year loan because banks want the loan closed by retirement (usually age 60 or 65). This reduces your eligibility compared to a 25-year-old.
- LTV Ratio: For home loans, banks only lend 80% of the property value (as per their independent valuation). Even if you are eligible for ₹1 Crore based on your salary, if the house is valued at ₹1 Crore, the bank will only give you ₹80 Lakh.
Frequently Asked Questions
What is FOIR in loan eligibility?
FOIR stands for Fixed Obligation to Income Ratio. It is the percentage of your net monthly income that lenders permit to go towards loan EMIs. Indian banks typically use 50-55% for high-income borrowers and 35-45% for lower brackets.
Does a higher CIBIL score increase my loan eligibility?
A higher score doesn't directly increase the maximum amount you can borrow, but it gets you a lower interest rate, which raises the loan amount you can afford for the same EMI.
Can I add a co-applicant to increase eligibility?
Yes, adding your spouse or a parent as a co-applicant clubs both incomes for FOIR calculation, often boosting eligibility by 60-100%.
Are credit card outstandings counted as EMIs?
Lenders typically count 5% of your total credit card outstanding as a deemed monthly obligation. A ₹3 lakh outstanding effectively reduces your eligibility by an EMI of ₹15,000.
Why did the bank approve less than my eligibility?
Banks also consider Loan-to-Value (LTV) caps, age vs tenure limits, employment stability, and internal credit policies that may further reduce the sanctioned amount.