How FOIR & Debt-to-Income Ratio Determine Your Loan Eligibility

Learn how Indian banks calculate Fixed Obligation to Income Ratio (FOIR) and how paying off small debts can double your sanctioned loan amount.

By FINDEAL Editorial Team

• Published on Sep 13, 2026 • 3 min read

Key Takeaways

Learn how Indian banks calculate Fixed Obligation to Income Ratio (FOIR) and how paying off small debts can double your sanctioned loan amount.

Before sanctioning a loan, every bank evaluates one critical metric: Can you comfortably afford the monthly EMI alongside your existing expenses? This is where FOIR comes in.

What is FOIR (Fixed Obligation to Income Ratio)?

FOIR represents the percentage of your net monthly income already committed to fixed monthly debt payments (existing loan EMIs, credit card minimums, and rent). Most Indian lenders cap maximum FOIR between 40% and 55% for personal loans, and up to 60%-65% for high-earning home loan applicants.

Standard FOIR Thresholds by Income:

Net Salary < ₹50,000/mo: Maximum 40% FOIR
Net Salary ₹50,000 - ₹1,000,000/mo: Maximum 50% FOIR
Net Salary > ₹1,000,000/mo: Up to 60% FOIR

Worked Example of FOIR Calculation

Suppose your monthly net salary is ₹100,000. You currently pay ₹15,000 EMI for a car loan and ₹5,000 for a personal credit line. Your existing fixed obligations total ₹20,000 (20% current FOIR).

If the bank allows a 50% max FOIR (₹50,000 total obligation limit), your remaining available capacity for a new EMI is ₹50,000 - ₹20,000 = ₹30,000/month.

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