FOIR
Fixed Obligation to Income Ratio is the share of monthly income already committed to debt repayment.
Lenders typically approve when total EMIs including the new loan stay under 40% to 55% of net monthly income. Closing small loans or credit-card dues before applying improves eligibility more than a higher salary claim.
Why FOIR matters when comparing products
The Fixed Obligation to Income Ratio (FOIR) is a key metric lenders use to assess repayment capacity. A lower FOIR indicates more disposable income, potentially leading to better loan terms, higher eligible loan amounts, or easier approval when comparing various financial products. It reflects an individual's existing debt burden, influencing how new debt commitments are viewed across different lending institutions in India.
Illustrative example
If an individual earns ₹50,000 net monthly and has existing EMIs totalling ₹15,000, their current FOIR is 30% (₹15,000 / ₹50,000). If a lender's FOIR limit is 50%, they might be eligible for a new EMI of up to ₹10,000 (50% of ₹50,000 = ₹25,000; ₹25,000 - ₹15,000 = ₹10,000), assuming other criteria are met.