Home Loans & Finance
What is FOIR?
The single number that decides how much you can borrow. And the car loan that is quietly costing you a bedroom.
The short answer
FOIR is the share of your income already committed to EMIs — existing ones, plus the home loan you're applying for.
Lenders cap it, typically at 40% to 55% of net monthly income, depending on how much you earn.
Which means: every existing EMI is directly reducing the house you can buy. A ₹20,000 car EMI costs you roughly ₹25 lakh of home loan.
How FOIR is calculated
The formula
FOIR = (Existing EMIs + Proposed home loan EMI) ÷ Net monthly income
- Net monthly income
- ₹1,50,000
- Existing EMIs
- ₹20,000
- Lender's FOIR cap
- 50%
- Maximum total EMI
- ₹75,000
- Available for a home loan EMI
- ₹55,000
What counts as an obligation
| Counted | Not counted (usually) |
|---|---|
| Car loan EMI | Rent you currently pay |
| Personal loan EMI | Household expenses |
| Education loan EMI | School fees |
| Credit card minimum due — if you carry a balance | Credit cards you clear in full each month |
| Any other loan EMI | |
| Consumer durable / phone EMIs | |
| Guarantees you've given on someone else's loan |
That last one surprises people. If you stood guarantor for a sibling's loan, some lenders will count it as YOUR obligation — because if they default, you pay. It is worth knowing before you apply.
The cap — and how it varies
There is no single legal FOIR limit. Each lender sets its own, and it usually rises with income:
- Lower incomes: around 40–45%. The logic is sound — someone earning ₹40,000 needs a larger share of it simply to live.
- Middle incomes: around 50%.
- Higher incomes: 55–60% or more. Someone earning ₹5 lakh a month can commit a larger share and still live comfortably.
How to improve your FOIR — before you apply
Every ₹10,000 of monthly EMI you clear frees roughly ₹12 lakh of home loan capacity.
So paying off a ₹20,000 car loan a year early is not just about the car loan. It is worth about ₹25 lakh of house.
That is one of the highest-return financial decisions available to a prospective buyer, and almost nobody frames it that way.
- Close small loans — personal loans, consumer EMIs, the phone you're paying for in instalments.
- Clear credit card balances in full. A revolving balance is counted as an obligation; a card you clear each month usually isn't.
- Add a co-applicant. A working spouse's income goes into the denominator, and the tax deductions double.
- Declare all income — rental income, bonuses, variable pay. Some lenders count them; ask which do.
- Extend the tenure — a longer tenure means a lower EMI, which means a lower FOIR, which means a bigger loan. But far more interest. Use it to get approved, then prepay — which is free on a floating loan.
The lender's FOIR cap is the maximum they will lend. It is not a recommendation.
An EMI at 55% of your income is legal, approvable, and uncomfortable to live with for twenty years — through job changes, a child, a parent's illness, a year of bad luck.
Just because a bank will lend it does not mean you should borrow it. The bank has modelled your default risk. It has not modelled your life.
Home loan rates and the RBI's repo rate move. A page that says 'the rate is X%' is wrong within months, and quietly misleads everyone who reads it afterwards.
So we explain how the mechanism works — which does not change — and leave the number to you.
For the current repo rate, check the RBI's own website. For current home loan rates, check three or four lenders directly. Both take five minutes, and both are more reliable than anything a content site tells you.
Frequently asked questions
What is FOIR in a home loan?
Fixed Obligation to Income Ratio — the share of your net monthly income committed to EMIs, existing plus the proposed home loan. Lenders typically cap it between 40% and 55%, with the cap rising as income rises.
How does an existing car loan affect my home loan?
Directly and substantially. Every Rs 10,000 of monthly EMI you carry reduces your home loan capacity by roughly Rs 12 lakh. So a Rs 20,000 car EMI is costing you around Rs 25 lakh of house. Closing it before you apply is one of the highest-return financial decisions available to a prospective buyer.
Do credit cards affect home loan eligibility?
If you carry a balance, yes — lenders count the minimum due as a monthly obligation. A card you clear in full each month usually is not counted. Clear your balances before you apply.
What is a good FOIR?
Lower is better for approval and for your life. Lenders will go to 50-55% for higher earners, but that is their maximum, not a recommendation. An EMI at 55% of income is uncomfortable to live with for twenty years, through job changes, children and bad luck. The bank has modelled your default risk; it has not modelled your life.
Does being a guarantor affect my FOIR?
It can. Some lenders count a guarantee you have given on someone else's loan as your own obligation — because if they default, you pay. It is worth knowing before you apply.