# What Is FOIR and How Lenders Use It

> FOIR is the share of your income already going to EMIs. Lenders cap it around 50–60% to decide your loan — here's how it sets the amount you can borrow.

_By emi.me Editorial · Reviewed by emi.me Editorial · Updated 2026-06-25_
Source: https://emi.me/learn/what-is-foir-and-how-lenders-use-it/

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**FOIR — the fixed-obligation-to-income ratio — is the share of your net monthly income already committed to EMIs and fixed obligations.** Lenders cap it (commonly around 50–60%) so that a new loan won't stretch you too far. Whatever headroom is left below the cap, after your existing EMIs, is the new EMI you can take on — and that EMI decides how big a home loan you qualify for.

## How the cap becomes a loan amount

The logic runs in three steps. First, your income times the FOIR cap gives your **maximum total EMI**. Second, subtract your **existing EMIs** to get the **affordable new EMI**. Third, convert that EMI into a loan amount at the going rate and tenure — the reducing-balance formula run in reverse.

**Worked example.** On a net income of ₹1,00,000 with no other EMIs and a 50% cap, you can afford about ₹50,000 of EMI, which supports a home loan of roughly **₹57,61,542** over 20 years at 8.5%. Add an existing ₹15,000 EMI and your headroom drops to ₹35,000 — and the eligible loan falls to about **₹40,33,079**. Try your own numbers below.

## Why existing EMIs hurt so much

Because the cap is on *total* obligations, every rupee of existing EMI comes straight off your home-loan headroom. That's why clearing a small personal or car loan before you apply can lift your eligibility by several lakh. It's also why lenders look closely at your [credit report](/glossary/cibil-score/) — undisclosed EMIs change the picture.

## The other limit: LTV

FOIR is only half the story. The lender also caps the loan as a fraction of the property's value — the [loan-to-value](/glossary/ltv/) ratio — so you must arrange the rest as a [down payment](/glossary/down-payment/). Your final sanction is the **lower** of the FOIR-based amount and the LTV-based amount. See [down payment, LTV and what you actually need to arrange](/learn/down-payment-ltv-and-what-you-need-to-arrange/), and [how to improve your eligibility](/learn/how-to-improve-your-loan-eligibility/) for the levers that help. Figures here are indicative — confirm with the lender.