FOIR is the share of your monthly income already committed to fixed payments. It is one of the first things a lender calculates, and it decides how much room is left for a new loan.
30%
Healthy
- Committed each month
- ₹45,000
- Room for a new EMI
- ₹30,000
Below 40% is comfortable. Lenders will generally see room for a new EMI.
What loan would that headroom support?Indicative only. Final eligibility, interest rate, charges and sanction are decided by the lender after full assessment of your profile and documents. Transakt does not lend and does not approve loans.
The formula
FOIR = (total monthly fixed obligations ÷ gross monthly income) × 100
Fixed obligations means every EMI you pay, the minimum due on your credit cards, any rent you pay, and other regular committed outgoings. Gross monthly income is your income before tax — salary, business income, rental income and anything else regular and provable.
What the number means
| FOIR | How a lender reads it |
|---|---|
| Under 40% | Comfortable. There is clear room for a new EMI. |
| 40% – 55% | The range most lending happens in. Workable, though the amount may be trimmed. |
| Above 55% | Constrained. Most lenders will reduce the amount, stretch the tenure, or decline. |
A worked example
Gross monthly income ₹1,50,000. A car loan EMI of ₹18,000, a personal loan EMI of ₹22,000, and a credit card minimum due of ₹5,000 — total obligations ₹45,000.
FOIR is 30%. At a target of 50%, the room left for a new EMI is ₹1,50,000 × 0.50 − ₹45,000 = ₹30,000 a month. At 11% over fifteen years, that supports a loan of roughly ₹26.4 lakh.
How to improve it before applying
- Clear the smallest obligation first. Counter-intuitively, closing a ₹8,000 EMI often frees more borrowing capacity than paying down a large loan slightly.
- Pay off credit card balances. The minimum due counts as a fixed obligation, and it is usually the most expensive money you owe anyway.
- Add a co-applicant with income. Their income joins the numerator, which is the fastest lever available.
- Do not open anything new in the three months before applying.
Work out what your headroom supports
Does rent count as an obligation?
Most lenders include it, some do not, and some include only part of it. Assume it counts — it is better to be conservative in your own planning than to be surprised.
Is FOIR calculated on gross or net income?
Usually gross, before tax. Some lenders work on net income and set a correspondingly higher threshold. The tool here uses gross, which is the more common approach.
How is FOIR worked out for a business owner?
It is less mechanical. Lenders build an assessed income from your ITR, your financial statements and your bank statements, then apply a similar ratio. For business lending they will often look at DSCR alongside it. That calculator is here.