What is FOIR?

Updated September 2026 2 min read

How it is calculated

FOIR = (total monthly fixed obligations ÷ gross monthly income) × 100

Obligations include every loan EMI, the minimum due on credit cards, rent you pay, and other regular committed outgoings. Income is gross monthly income before tax — salary, business income, rental income, anything regular and provable.

A worked example

Income ₹1,50,000 a month. A car loan of ₹18,000, a personal loan of ₹22,000 and card minimums of ₹5,000 — obligations of ₹45,000.

FOIR is 30%, which is comfortable. At a 50% target, the headroom for a new EMI is ₹30,000 a month, which at 11% over fifteen years supports a loan of roughly ₹26 lakh.

Now add a ₹25,000 EMI. Obligations become ₹70,000, FOIR becomes 47%, and headroom falls to ₹5,000 — supporting about ₹4.4 lakh. One additional loan changed the borrowing capacity by more than ₹20 lakh.

What counts, and what is arguable

• Always counted: loan EMIs, credit card minimum dues, overdraft interest.
• Usually counted: rent you pay, though some lenders exclude it if you are buying the home you will move into.
• Sometimes counted: a loan you have guaranteed for someone else. It sits on your report and lenders may treat it as yours.
• Not counted: living expenses, school fees, insurance premiums. These matter to you but not to the FOIR calculation.

The most effective thing you can do

Clear the smallest obligation, not the largest. Closing an ₹8,000 EMI entirely removes ₹8,000 from the numerator. Paying ₹2 lakh off a large loan barely moves the EMI at all. Counter-intuitive, but it is how the arithmetic works.

After that: pay off credit card balances, add a co-applicant with income, and avoid taking anything new in the three months before you apply.

FOIR for business owners

It is less mechanical. Lenders construct an assessed income from your ITR, financial statements and bank statements, then apply a similar ratio. For larger business facilities they will look at DSCR alongside or instead.

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