How lenders decide eligibility
Most Indian banks use FOIR (Fixed Obligation to Income Ratio), also called the debt-to-income ratio. They cap your total monthly EMIs — existing plus new — at a percentage of your net income, usually 40–55%. The higher your income, the higher the FOIR they'll allow.
Your maximum affordable EMI = (income × FOIR) − existing EMIs. The loan amount is then back-calculated from that EMI, the interest rate and the tenure.
Ways to increase your eligibility
- Close small existing loans — every ₹1,000 of existing EMI directly reduces your borrowing capacity.
- Add a co-applicant — a spouse's income is clubbed with yours, often raising eligibility substantially.
- Choose a longer tenure — lowers EMI, so you qualify for more (but pay more total interest).
- Improve your credit score — a higher score can mean a lower rate, which raises eligibility.
FAQs
What is FOIR / debt-to-income ratio?
It's the share of your monthly income that goes to loan EMIs. Banks won't let total EMIs exceed their FOIR limit (commonly 50%), to ensure you can still cover living costs.
Does this include home, car and personal loans?
The eligibility method is the same across loan types. Home loans often allow higher FOIR and longer tenures; personal loans usually shorter tenures and higher rates. Adjust the inputs accordingly.
Why might a bank offer less than this shows?
Lenders also cap home loans at a % of property value (LTV, typically 75–90%), and factor in job stability and credit history — so the sanctioned amount can be lower than the income-based estimate.