FOIR, the fixed obligation to income ratio, is the share of monthly net income already committed to loan repayments. Lenders use it to judge how much room a borrower has for a new EMI before approving a home or personal loan. It is a lender underwriting norm rather than a regulation. The Reserve Bank of India's Master Circular on Housing Finance, the consolidated instrument for bank housing loans, prescribes the loan to value ratio and the risk weight but sets no limit on the share of an income that may go to repayments, so each lender sets its own ceiling, typically somewhere in the 40 to 55% band and applies it to net take-home income rather than gross salary.
The ratio counts existing EMIs and fixed obligations against income, so a borrower already carrying a car loan and a personal loan has less headroom than the salary alone suggests. The single most common misconception is treating a widely quoted figure like 50% as an RBI rule. It is not. It is a convention and the exact cap moves from lender to lender and with the borrower's profile.
On a net income of ₹1,00,000 a month with existing EMIs of ₹35,000, FOIR is 35%. Against a 50% lender cap that leaves roughly ₹15,000 of monthly headroom for a new EMI.
Where It Shows Up #
FOIR is calculated during any home or personal loan underwriting, though the applicant rarely sees the number itself. Loan eligibility calculators compute it behind their forms.
The Source #
RBI Master Circular on Housing Finance, RBI/2025-26/16, DOR.CRE.REC.No.12/08.12.001/2025-26, dated 1 April 2025. Section 3, Quantum of Loan, prescribes loan to value ratios and risk weights and carries no income-to-instalment provision; the 40 to 55% band is standard lender practice, not a regulation. The RBI reissues master circulars each 1 April. Issuing authority.
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