What is FOIR?
FOIR, or fixed obligation to income ratio, measures how much of a borrower's monthly income is already committed to fixed payments — loan EMIs, and in some lenders' policies rent or minimum credit card dues. Banks and NBFCs in India use it as the main affordability check for personal loans, EMI-based loans and many other products.
FOIR formula
FOIR (%) = (total fixed monthly obligations ÷ net monthly income) × 100To check whether a borrower can take a new loan, add the new EMI to the obligations and compare the result with the lender's FOIR cap.
Worked example
A borrower earns ₹60,000 a month (net) and already pays ₹12,000 in EMIs. Their FOIR today is 12,000 ÷ 60,000 = 20%.
They apply for ₹3,00,000 at 14% for 36 months. The new EMI is about ₹10,253, so FOIR with the new loan is (12,000 + 10,253) ÷ 60,000 = 37.1%.
Under a 50% FOIR cap, total obligations can reach ₹30,000, leaving room for up to ₹18,000 a month in new EMIs — roughly ₹5.27 lakh at the same rate and tenure.
How lenders use FOIR
Every lender sets its own FOIR cap in its credit policy, and the cap often varies by product and income band. In practice FOIR is one rule among several — alongside bureau score, age, location and bank statement behaviour. Small NBFCs and LSPs increasingly automate it:
- AI bank statement analysis identifies salary credits and existing EMIs from the statement and calculates FOIR at 35%, 40%, 45% and 50% automatically.
- A business rule engine applies the FOIR cap to every application and can reduce the approved amount to fit within it. See example credit policy rules.
How to reduce FOIR
- Prepay or close small existing loans before applying.
- Choose a longer tenure to lower the new EMI.
- Add a co-applicant's income where the product allows it.
- Apply for a smaller loan amount.
Frequently asked questions
What is FOIR?
FOIR (fixed obligation to income ratio) is the share of a borrower's monthly income that already goes to fixed obligations such as EMIs. Lenders use it to judge whether a borrower can afford a new loan.
How is FOIR calculated?
FOIR = (total fixed monthly obligations ÷ net monthly income) × 100. To check eligibility for a new loan, lenders include the new EMI in the obligations.
What is a good FOIR?
Lower is better. Each lender sets its own FOIR cap in its credit policy, and caps are often higher for higher-income borrowers. Use the calculator to compare results at caps from 35% to 60%.
Does FOIR use gross or net income?
It depends on the lender. Many use net (take-home) income; some use gross income. This calculator uses net monthly income.
How can a borrower reduce FOIR?
Close or prepay existing loans, choose a longer tenure to lower the new EMI, add a co-applicant's income, or apply for a smaller amount.
Run FOIR checks on every application automatically. CredBrick calculates FOIR from bank statements for small NBFCs and LSPs. See bank statement analysis