FOIR in one sentence
FOIR, or Fixed Obligation to Income Ratio, is the percentage of your monthly income already committed to fixed repayments such as EMIs. If you earn ₹50,000 and pay ₹15,000 in EMIs, your FOIR is 30%.
Lenders care because it shows what's left to live on. A borrower with a high salary but heavy EMIs can be a bigger risk than someone earning less with no debts.
How to calculate FOIR
FOIR = total monthly obligations ÷ monthly income × 100
The details differ between lenders, but this is the usual approach:
- Obligations: EMIs on home, car, personal and consumer loans, plus a portion of credit card dues, commonly 5% of the outstanding balance.
- Income: in-hand salary if you are employed, or ITR profit plus depreciation, divided by 12, if you are self-employed. Regular income such as rent is often counted at about 50%.
Living costs such as rent, groceries and school fees are generally not part of the calculation, though a lender may ask about them. Your own budget should certainly include them.
A worked example
| Item | Per month |
|---|---|
| In-hand salary | ₹60,000 |
| Existing car loan EMI | ₹8,000 |
| Credit card dues of ₹20,000, counted at 5% | ₹1,000 |
| Current FOIR (₹9,000 ÷ ₹60,000) | 15% |
| Allowed for all EMIs at a 50% norm | ₹30,000 |
| Room left for a new EMI | ₹21,000 |
A lender can then convert that ₹21,000 into a loan amount based on the rate and tenure. Try your own numbers on the FOIR calculator.
What FOIR is considered acceptable?
There's no single official limit. Each lender sets its own, usually allowing more as income rises. Our calculators use these norms for a personal loan, adding 5 points for car and business loans and 10 points for loans against property:
| Monthly income | Personal loan norm |
|---|---|
| Below ₹30,000 | 40% |
| ₹30,000 to ₹74,999 | 50% |
| ₹75,000 to ₹1,49,999 | 60% |
| ₹1.5 lakh and above | 65% |
The calculators cap FOIR at 80% for every loan. Some NBFCs may go well above the bank norm, but this usually comes with a higher rate. Just because a lender allows it doesn't mean it's comfortable for your household, so consider your other costs too.
How FOIR turns into a loan amount
Every ₹1,000 of EMI capacity supports a certain loan size, which depends on the rate and tenure. At 10.5% over 5 years, an EMI of about ₹21,500 repays a ₹10 lakh loan. That's why a small existing EMI can have a surprisingly large effect.
On a ₹30,000 salary, for example, our personal loan estimate falls from about ₹6.97 lakh to ₹4.65 lakh with an existing ₹5,000 EMI. That's a drop of more than ₹2.3 lakh from one EMI.
How to reduce your FOIR
- Close small loans first. Clearing a small loan with a high EMI is often the fastest way to create room.
- Pay off credit card balances. ₹1 lakh of dues counts as ₹5,000 a month under the 5% approach.
- Extend an existing loan's tenure. This lowers the EMI, but you'll pay more total interest, so check the cost first.
- Add an earning co-applicant. A lender may count a spouse's or parent's income alongside yours, though it will count their obligations too.
- Show all your income. Rent, or income from a side business that's declared in your ITR, may count if you can document it.
For more ideas, read how to increase your loan eligibility.