FOIR Deep Dive
FOIR Explained — The Affordability Ratio Lenders Don't Talk About
Fixed Obligations to Income Ratio: how it caps your eligibility, the difference between gross and net FOIR, and what counts as a 'fixed obligation'.
FOIR vs DSCR — what's the difference?
FOIR
Personal affordability: all your fixed obligations ÷ your net income. Used for both salaried and self-employed. Most banks cap at 50–60%.
DSCR
Business cash flow: EBITDA ÷ annual debt service. Used for business loans. Most banks require 1.5x+.
When FOIR matters more
Personal loans, home loans, salaried applicant files, small-ticket business loans.
When DSCR matters more
Large-ticket business loans, MSME term loans, LAP for business purpose.
When both matter
Self-employed applicants for business loans — lender checks both. A pass on one and fail on the other usually means decline.
What counts as a 'fixed obligation'?
- All existing loan EMIs (home, car, personal, business, education, gold)
- Credit card minimum dues (typically 5% of limit or utilised, varies by lender)
- Overdraft interest servicing (averaged or 1% of limit per month)
- Statutory obligations like PF/ESI if self-employed with employees
- Rent paid (some lenders count, most don't)
- Insurance premiums (some lenders count, most don't)
- Proposed EMI on the new loan you're applying for
Practical example
FOIR worked example — and how to fix it
- Prepay the ₹12,000/month personal loan → frees ₹12,000 of FOIR headroom
- Prepay the car loan → frees ₹15,000 of headroom
- Pay down the credit card → reduces the 5% min due obligation
- Add spouse with ₹1,00,000 income → combined FOIR drops to ~38%
- Take a secured LAP instead — FOIR cap is more flexible on secured
FAQ
Common questions
Why is my eligibility lower than my EMI affordability suggests?+
Because lenders apply the lower of two caps: FOIR-based eligibility (income-based) and DSCR-based eligibility (cash-flow-based). If FOIR says you can afford ₹40,000 EMI but DSCR says only ₹25,000, the lender caps you at ₹25,000. Conversely, if DSCR is strong but FOIR is tight (due to other EMIs), FOIR caps you.
Does the lender include my spouse's EMIs in my FOIR?+
Only if you're a co-borrower on those loans, or your spouse is a co-applicant on the new loan. If you apply solo, the lender sees only your obligations. But the lender may still ask about household EMI burden as a soft factor in the underwriting memo.
If I have an overdraft, does the OD limit count in FOIR?+
Most lenders count 1–2% of the OD limit as a monthly obligation (proxy for interest servicing), regardless of actual utilisation. So a ₹20 L OD adds ₹20,000–40,000 to your monthly obligations. Some lenders only count actual utilisation — clarify with the lender upfront.
Next step
Get your file reviewed before you apply again.
Share basic details — a senior advisor will read your profile, diagnose what's blocking approval, and tell you exactly what to fix first.
- No CIBIL pull until strategy is agreed
- No blind portal submissions
- Review by a senior advisor — not a call-centre agent
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