What is FOIR, and how does it decide your loan eligibility?
The debt-to-income math lenders use to decide how much they'll offer you.
When a lender decides how much to offer you, they’re not really asking “how much do you earn” — they’re asking “how much EMI could you take on without your total obligations getting risky.” That cap is called FOIR: your Fixed Obligation to Income Ratio, and it’s the single number that does most of the work behind a loan eligibility decision.
The formula lenders actually use
FOIR caps your totalEMI obligations — existing loans plus the new one you’re applying for — at a fixed percentage of your income, commonly 40–50% for salaried borrowers. Whatever room is left within that cap after your existing EMIs is what a lender will let you commit to a new loan, and that available EMI, run through the standard loan-amount formula at the new loan’s rate and tenure, is what determines your eligible loan amount.
How an existing EMI eats into your eligibility
Using the Loan Eligibility Calculator’s own defaults — ₹80,000 monthly income, a 50% FOIR limit, 9% rate, 15-year tenure — your total allowed EMI is ₹40,000. With ₹10,000 in existing EMIs, only ₹30,000 is available for a new loan, giving an eligible loan amount of ₹29,57,802. Clear that existing EMI entirely and the full ₹40,000 becomes available, raising eligibility to ₹39,43,736— nearly ₹10 lakh more, purely from freeing up that one obligation.
Work out how much you can borrow, based on your income and existing EMIs.
Why the FOIR limit itself isn’t fixed
The percentage itself isn’t a universal rule — it’s a policy each lender sets, and it can vary by lender, income bracket, and how strong your credit profile is. Keeping the same ₹80,000 income and ₹10,000 existing EMI, dropping the FOIR limit from 50% to a stricter 40% cuts eligibility from ₹29,57,802 to ₹21,69,055— a meaningful difference for exactly the same income and debt.
Since FOIR isn’t fixed, it’s worth checking more than one lender if you’re close to a borderline eligibility number — a lender with a more generous FOIR policy, or one that gives credit for a strong repayment history, can offer meaningfully more for the identical income and obligations.
All figures are indicative and for educational purposes only — not financial advice.
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