You find the flat, agree a price and apply for a loan. The bank decides how much to lend you largely on one ratio: FOIR, the fixed obligation to income ratio. Understand it before you apply and you avoid two problems, a rejection, and a loan your monthly budget can't comfortably carry.
What FOIR measures
FOIR is the share of your income already committed to fixed repayments, plus the new home loan EMI you're applying for:
FOIR = (existing EMIs + new home loan EMI) ÷ the income the lender uses
Take an illustration: you earn ₹1.5 lakh a month, already pay ₹20,000 in EMIs, and apply for a home loan with a ₹55,000 EMI. Your FOIR is (₹20,000 + ₹55,000) ÷ ₹1,50,000 = 50%.
The catch is in "the income the lender uses". Some lenders work from gross income, some from net (take-home) income, and they treat bonuses, rental income and other earnings in different ways. The same borrower can have a different FOIR at two banks.
There is no single FOIR limit
You'll often see a "standard" FOIR limit quoted. No national rule sets one. Each lender sets its own, and most don't publish them for home loans.
One that's public: SBI's page for loans against property (a different product, but the same kind of test) caps your total EMIs at a share of net monthly income that rises with your income:
Two things to notice: the limit is set against net income, and it's higher for higher earners. Don't assume one figure applies everywhere. Ask each lender you're considering which limit and income basis apply to your home loan.
Why your existing EMIs matter so much
Every rupee of existing EMI is a rupee the lender won't let you put towards the new loan, and at 9% over 20 years, ₹1 of monthly EMI supports about ₹111 of loan. In this illustration, with ₹1.5 lakh of monthly income and a 50% limit, each ₹10,000 of existing EMI removes about ₹11 lakh from the loan you can get:
Illustration: a lender limit of 50% of ₹1.5 lakh monthly income, 9% interest, 20-year tenure (model loan-math@1). Every ₹10,000 of existing EMI removes about ₹11 lakh of loan. Illustration — inputs are stated in the text.
Two buyers, same loan, different outcomes (illustration). Both want ₹80 lakh at 9% over 20 years, an EMI of ₹71,978.
- Buyer A earns ₹2 lakh a month and pays a ₹12,000 car EMI and an ₹8,000 personal loan EMI. FOIR: (₹12,000 + ₹8,000 + ₹71,978) ÷ ₹2,00,000 = 46%.
- Buyer B earns ₹1.8 lakh a month and pays a ₹14,000 car EMI and a ₹15,000 personal loan EMI. FOIR: (₹14,000 + ₹15,000 + ₹71,978) ÷ ₹1,80,000 = 56.1%.
In this illustration, under a lender limit of 50–55%, Buyer A is within it and Buyer B is over. Buyer B would probably be offered a smaller loan, or asked to reduce existing debt first. Their credit scores might be identical; the obligations make the difference.
Obligations to check before you apply
Pull your credit report and list everything on it, because that's what the lender will see. Then ask the lender how it treats each of these:
- Credit cards. Some lenders look at balances or minimum dues, and some may take account of available limits. Ask, rather than assume.
- Loans in joint names, such as a car loan with your spouse.
- Short loans about to end. A loan with three EMIs left may or may not be counted.
- Small digital loans and buy-now-pay-later that report to credit bureaus.
Improving your position without draining your savings
Closing a small loan. In the illustration above, closing a ₹14,000 EMI raises the loan available on ₹1.5 lakh a month from ₹67.8 lakh to ₹83.4 lakh under a 50% limit, an extra ₹15.6 lakh. That can be worth it. But the cash you use to close the loan is cash you no longer have for the down payment, stamp duty or an emergency. Check you'll still have several months of expenses in reserve after buying.
Adding a co-borrower. A working spouse or parent on the loan adds their income to the calculation. It also makes them equally responsible for the repayments.
Including all documented income. Rental or other income can count if you can document it, usually with tax returns. Ask the lender what it accepts.
Borrowing less. A bigger down payment or a cheaper property lowers the EMI directly.
After a rejection, don't apply everywhere at once. Multiple applications in a short period show up on your credit report. Fix the specific obligation causing the problem, let your report update, then reapply.
Eligible isn't the same as comfortable
A FOIR test tells you the most a lender is willing to lend. It doesn't tell you what your household can comfortably repay once you add school fees, insurance, savings goals and a buffer for a job change. Our ₹40 LPA affordability guide works through that difference.
In a Gulmohar evaluation, FOIR is one of five factors in the financial fit score, alongside how many months of reserves you'd have, your loan-to-value, debt relative to net worth, and liquidity. A high FOIR also caps the overall financial fit score, however strong the other factors are. The evaluation also stress-tests the purchase against an income drop, a job loss and an interest-rate rise of up to 3 percentage points.
To test your own numbers, use the free home affordability calculator.
Common questions
How is FOIR calculated for a home loan?
Add up your fixed monthly obligations, meaning existing EMIs plus the proposed home loan EMI, and divide by the income the lender uses. For example, ₹20,000 of existing EMIs plus a ₹55,000 home loan EMI against ₹1.5 lakh of monthly income is a FOIR of 50%. Ask your lender whether it uses gross or net income, and which obligations it counts.
Do all banks use the same FOIR limit?
No. There is no national limit, and lenders set their own. SBI, for example, caps EMIs at 50%, 55% or 60% of net monthly income for loans against property, depending on the borrower's net annual income. Ask each lender for the limit and income basis that apply to your loan.
Does an unused credit-card limit affect my application?
It depends on the lender. Some look at card balances and minimum dues, some may take account of available limits, and the rules aren't published uniformly. Before applying, check your credit report and ask the lender how it treats cards you pay off in full every month.
Sources
- Loans against property: eligibility and maximum permissible EMI/NMI — State Bank of India, updated 20 September 2025
Figures labelled “illustration” are worked examples with the inputs stated in the article, not market data. Spotted an error? Write to hello@gulmohar.ai and we will correct it.