What is FOIR (Fixed Obligation to Income Ratio)?
The share of your income that goes to loan EMIs — used by banks to decide how much you can borrow.
FOIR (also called DTI) is your total monthly loan EMIs divided by net income. Banks usually cap it at 40–50%. A lower FOIR means you qualify for a larger loan; existing EMIs reduce your eligibility.
Example
On 100,000 income with a 50% FOIR cap, your EMIs can total 50,000.
How FOIR is calculated
FOIR — the Fixed Obligation to Income Ratio, sometimes called DTI — is your total fixed monthly obligations divided by your net monthly income, as a percent. Obligations include existing loan EMIs, credit-card minimums and the EMI of the new loan you are applying for.
Why lenders use it
FOIR measures how much of your income is already committed, and therefore your capacity to take on more debt. Most lenders cap it around 40–50%: a lower FOIR improves your chances of approval and a better rate, while a high one signals over-extension. Paying down existing debts before applying lowers your FOIR.
A second example: right at the cap
Suppose your net monthly income is 250,000 and the lender's FOIR cap is 45%. Your maximum allowed fixed obligations are 250,000 × 0.45 = 112,500. You already pay 62,500 a month on an existing car loan EMI. That leaves only 112,500 − 62,500 = 50,000 of headroom for a new loan's EMI — even though your income looks comfortable, the existing EMI has used most of your borrowing capacity. This is why paying off or reducing an existing loan before applying for a new one can raise how much you're approved for, without any change in income.
A common mistake: confusing FOIR with affordability
A low FOIR shows a lender you can service the instalment, not that the loan is a good financial decision for you. Two borrowers with an identical 40% FOIR can be in very different positions — one has stable income and savings set aside, the other is one missed paycheck from default. FOIR is a lender's risk screen, calculated on gross or net income depending on the bank's policy; it isn't a personal budgeting tool, so passing a lender's FOIR check is not the same as confirming the EMI comfortably fits your own spending and savings plan. A useful habit is to run your own, stricter number — many financial planners suggest keeping total debt payments well under a lender's maximum, precisely because the lender's cap is calibrated to its own default risk, not to your comfort or your ability to absorb an income shock. If your job income is variable or you're supporting other dependants, staying meaningfully below the maximum the bank allows gives you room to keep paying if a month goes badly.
How the concept is regulated elsewhere
"FOIR" is the term commonly used in South Asian banking; in the US the equivalent metric is called the debt-to-income ratio (DTI), defined by the Consumer Financial Protection Bureau as total monthly debt payments divided by gross monthly income. The CFPB's original 2013 Ability-to-Repay/Qualified Mortgage rule set 43% back-end DTI as the threshold for a "General" Qualified Mortgage — a benchmark still widely cited by US lenders, even though the CFPB has since also allowed price-based alternatives to a hard DTI cutoff. The underlying idea is identical everywhere: cap new borrowing at a share of income the lender considers safe, even though the exact percentage and what counts as "debt" varies by country and lender. FOIR interacts closely with your LTV and EMI — a lower EMI (from a longer tenure or larger down payment) directly lowers your FOIR.
FAQ
Is FOIR the same as a credit score?
No. FOIR (DTI) measures how much of your income is already committed to debt payments; a credit score measures your history of repaying debt on time. A lender can reject a high-FOIR applicant with an excellent credit score, and approve a low-FOIR applicant with a thin credit history — the two numbers answer different questions and are usually checked together.
Does FOIR count rent or only loan EMIs?
It depends on the lender. Most banks include only fixed credit obligations — existing loan EMIs, credit-card minimum payments, and the EMI of the loan being applied for — in the FOIR/DTI numerator. Rent and utility bills are typically excluded even though they are recurring, unless a specific lender's policy says otherwise, so always check what a given lender counts before estimating your own ratio.
Sources
- What is a debt-to-income ratio? – Consumer Financial Protection Bureau (accessed 26 September 2026)
- Summary of the Ability-to-Repay and Qualified Mortgage Rule – Consumer Financial Protection Bureau (accessed 26 September 2026)