FOIR is the single most important ratio in Indian retail lending. It decides how much loan a bank will give you before it decides at what rate. Yet most borrowers discover FOIR only after their application is rejected.
The formula
FOIR (%) = (existing monthly EMIs + proposed new EMI + recurring obligations) ÷ net monthly income × 100
Existing EMIs include home loan, car loan, personal loan, credit-card minimum due, student loan, two-wheeler loan. Recurring obligations include rent and child-school fees if the bank counts them (some do, some don't — ask).
Net income means take-home after tax, provident fund, and professional tax. Not gross. For the self-employed, banks use the net taxable income from your last two ITRs, often averaged.
Common FOIR ceilings by bank
| Bank | Salaried ceiling | Self-employed ceiling |
|---|---|---|
| SBI | 55–65% | 55% |
| HDFC | 65% for income ≥ ₹30k/mo; 50% below | 55% |
| ICICI | 60% baseline, up to 75% for ≥ ₹1L net/mo | 55% |
| Axis | 60–70% depending on branch discretion | 55% |
| Bajaj Housing | 65–70% (more aggressive — flag this to Jay) | 60% |
| LIC Housing | 55–65% | 50–55% |
These are soft ceilings. Branch managers can push above them on files with strong compensating factors — high CIBIL (780+), government-service employer, long relationship, or a co-applicant with independent income.
Worked example — the CIBIL × FOIR × LTV interaction
You earn ₹1,20,000/mo net. You pay ₹18,000/mo car-loan EMI and ₹5,000 credit-card minimum. You want a ₹60 lakh home loan at 7.15% for 20 years → proposed EMI ₹47,120.
FOIR = (18,000 + 5,000 + 47,120) ÷ 1,20,000 × 100 = 58.4%
That's within most bank ceilings but above LIC Housing's cap at 55%. So you either:
- Shift the car loan to your spouse (if eligible) — FOIR drops to 43.4%.
- Stretch the home-loan tenure to 25 years — EMI becomes ₹43,130; FOIR becomes 55%.
- Make a partial pre-payment on the car loan before applying — EMI drops, FOIR drops.
Why FOIR tightens the whole file
FOIR doesn't exist in isolation. Banks run it against three other filters at once:
- CIBIL band. A borrower with 780+ CIBIL can sometimes get a 5% FOIR relaxation.
- LTV (loan-to-value). If LTV goes above 80%, FOIR ceiling tightens by 5–10 percentage points.
- Tenure. Stretching tenure drops EMI and therefore FOIR, but most banks cap tenure at 70 years of borrower age at maturity.
The Money Matrix Hub take
When a bank's first response is "you aren't eligible at this amount," FOIR is the culprit 6 times out of 10. We don't accept the bank's first FOIR answer — we restructure. Typical moves:
- Add a spouse or earning parent as co-applicant.
- Pay off one high-EMI obligation and get a closure letter (banks accept this within 7 days).
- Step up to a different bank whose FOIR rule is kinder to your income slab.
FOIR is not a brick wall; it's a negotiating position. If your FOIR maths looks tight, send Jay your numbers on WhatsApp and we will walk you through which of the three moves above makes the biggest delta.
Rates and FOIR ceilings change as banks update their policy circulars. This page reflects March–April 2026 norms. A rate quoted here is not an offer until a bank issues a sanction letter.
