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A credit analyst must decide how much new EMI a borrower can take on without over-stretching their monthly income.
FOIR equals total fixed monthly obligations divided by net monthly income, times 100. The proposed EMI is added to obligations and the result is compared with the lender's policy band.
Net monthly income from salary credits or business receipts, every recurring EMI, card due and other fixed obligation visible in the statement or bureau report, and the proposed EMI.
Current FOIR, FOIR after the proposed loan, and the maximum new EMI that keeps the borrower within the lender's band.
FOIR (fixed obligation to income ratio) is the share of a borrower’s monthly income already committed to fixed payments such as loan EMIs and credit card dues, stated in percent. Lenders use it to cap how much more debt a person can safely carry. The lower the FOIR, the more room there is for a new loan.
How is FOIR calculated?
FOIR = (Total fixed monthly obligations ÷ Net monthly income) × 100
Fixed obligations usually include:
- EMIs on home, car, personal, business and consumer-durable loans.
- Credit card payments, often taken as a fixed percent of the outstanding or the minimum due, by policy.
- BNPL or loan-app instalments.
- For some lenders and products, rent or other fixed commitments.
Lenders then add the EMI of the loan being applied for and check the new FOIR against policy.
How is FOIR different from DSCR and from a simple EMI-to-income check?
| Measure | What it compares | Typical use |
|---|---|---|
| EMI-to-income | Only the new EMI against income | Rough first screen |
| FOIR | All fixed obligations, including the new EMI, against monthly income | Salaried and self-employed retail loans |
| DSCR | Business cash flow against yearly interest plus principal | Business and MSME loans |
The EMI-to-income check misses existing debts. FOIR catches them, which is why it is the standard measure for retail credit.
What FOIR do lenders accept?
There is no single regulatory number. Many lenders work within bands of about 40 to 60 percent of net income. Higher incomes often get more room, because the money left after obligations is larger in rupees. Secured loans such as home loans may get more room than unsecured personal loans. Each lender sets its own policy, so always read the specific credit policy.
Worked example: adding a new loan
A salaried applicant in Pune has take-home salary of ₹75,000 a month credited to their account. The statement shows:
| Obligation | Monthly amount |
|---|---|
| Car loan EMI | ₹12,500 |
| Consumer-durable EMI | ₹5,500 |
| Credit card payment | ₹6,000 |
| Total obligations | ₹24,000 |
Current FOIR = ₹24,000 ÷ ₹75,000 × 100 = 32 percent.
The applicant asks for a personal loan with an EMI of ₹15,000.
New obligations = ₹24,000 + ₹15,000 = ₹39,000. New FOIR = ₹39,000 ÷ ₹75,000 × 100 = 52 percent.
If the lender’s policy cap for this product were 50 percent, the most the applicant could carry is ₹37,500 (50 percent of ₹75,000), leaving room for a new EMI of ₹13,500. The lender might offer a smaller amount or a longer tenure.
Where does the analyst find income and obligations?
The application form states what the borrower declares. The bank statement shows what actually happens:
- Salary appears as a regular credit from the same employer around the same date each month.
- EMIs appear as recurring NACH, ECS or UPI AutoPay debits of the same amount to a lender.
- Card payments appear as transfers to a card issuer.
Debits to lenders that are not on the form are worth a question. They may be loans the borrower forgot, or did not mention.
What to read next
The next step is knowing exactly what to count: what counts as an existing obligation in a bank statement. Then see over-leverage detection from bank statements and how FOIR sits among other bank statement analysis signals.
TransactIQ reads bank statements for lenders and returns income and obligation signals among its 40+ engineered credit signals. See the bank statement analyzer.