FOIR Calculation Explained with Worked Examples and a Free Calculator
FOIR — fixed obligation to income ratio — is total monthly fixed obligations, including the proposed EMI, divided by monthly income, as a percentage. The formula is trivial. The judgement is entirely in what you admit on each side of the line, and the same borrower can land at 54% or 88% depending on decisions you make, not the borrower.
Key facts
- The formula is one line. FOIR = (existing monthly fixed obligations + proposed EMI) ÷ monthly income × 100.
- YuSight cites 100% of figures with one-click source verification, and the Repayment Tracker builds the obligation side from the bureau report and the bank statement together, so every EMI in the FOIR numerator traces back to a tradeline or a debit you can click through to.
- There is no general RBI FOIR cap — with one exception. For microfinance loans the ceiling is regulatory: repayment outflows are "subject to a limit of maximum 50 per cent of the monthly household income", covering "all outstanding loans (collateral-free microfinance loans as well as any other type of collateralized loans) of the household", principal and interest, existing and proposed (RBI, Master Direction — Regulatory Framework for Microfinance Loans, paras 5.1–5.2).
- RBI's own guidance to borrowers describes the norm loosely. "Typically a bank assumes that about 55-60 % of your monthly disposable / surplus income is available for repayment of loan," while noting some banks work off gross income instead (RBI, Home Loans FAQ).
- The cap you apply is a board decision you must be able to evidence. Since November 2023, regulated entities must "put in place, if not already there, Board approved limits in respect of various sub-segments under consumer credit," monitored by the Risk Management Committee (RBI/2023-24/85, 16 November 2023).
What is FOIR and what is the formula?
FOIR (%) = (Existing monthly fixed obligations + Proposed EMI) / Monthly income x 100
Two rules that stop most of the arguments before they start:
- The proposed EMI belongs in the numerator. A FOIR quoted without the facility being underwritten is a pre-application ratio and tells you nothing about the decision in front of you.
- Both sides must be on the same basis. Net obligations against net income, or gross against gross. Mixing them is the single most common error in Indian credit files and always flatters the borrower.
What counts as a fixed obligation?
Everything with a contractual monthly outflow the borrower cannot switch off. Build the list from the bureau report, not from the application form.
Item | Treatment | Note |
|---|---|---|
Existing term loan and secured loan EMIs | 100% | Take from the CIBIL account rows, not the borrower's declaration |
Proposed EMI on your facility | 100% | Compute at the sanctioned rate and tenor, not the teaser rate |
Credit card outstanding | Minimum amount due, commonly modelled at 5% of outstanding | A ₹2,84,000 balance is a real ₹14,200 monthly obligation |
Overdraft / revolving line | Interest servicing at the sanctioned limit, or drawing power where lower | Zero EMI does not mean zero obligation |
Joint accounts | 100% unless policy says otherwise and the co-borrower's income is separately verified | Liability is joint and several |
Guarantee obligations | Policy call — 0%, a stated haircut, or 100% | Decide by the guaranteed account's DPD grid, not by the relationship |
Rent paid | Include for a purchase that does not extinguish it; exclude where the borrower moves into the financed property | State the assumption in the memo |
Statutory deductions (PF, professional tax, TDS) | Not obligations — subtract them from income instead | Never count them twice |
Insurance premiums, chit contributions, SIPs | Generally excluded as discretionary | A chit liability with a bidding obligation is not discretionary |
The guarantee decision is the one that matters. A guarantee on an account running 000 for 36 months and a guarantee on an account at 47 days past due are the same legal instrument and completely different credit facts. Read the guaranteed account's grid before choosing the weight, and write the weight and the reason into the memo.
What counts as income?
Component | Admitted basis |
|---|---|
Salary | Net — gross less PF, professional tax and TDS. Verify against the bank credit, not the payslip alone |
Variable pay, bonus, incentive | A multi-year average, discounted. A common policy is 50% of the trailing three-year average |
Rental income | Net of maintenance and tax, and only where a registered lease and bank credits both exist. Many lenders admit 70–80% |
Business income (proprietor) | Profit after tax plus depreciation plus interest on the debt being refinanced, from the ITR and computation |
Co-applicant income | 100% where the co-applicant is a co-borrower on the facility and their own obligations are also in the numerator |
Agricultural income | Frequently excluded or heavily discounted, because it is untaxed and unevidenced |
Cash "surplus" the borrower describes | Zero |
The two failure modes are symmetrical. Admitting gross salary as income while counting net obligations understates FOIR. Admitting co-applicant income without pulling the co-applicant's own bureau report understates it further — you have added their salary and none of their EMIs. Verify the income side against Form 26AS and the bank statement, and the obligation side against the bureau report.
What FOIR caps do Indian lenders apply?
These are policy thresholds set by lender boards, not regulatory limits, and they move with product, income band and collateral. Treat the table as the shape of market practice, not as a rule.
Segment | Typical cap |
|---|---|
Salaried, income up to ~₹50,000/month | 40–50% |
Salaried, income ₹50,000–₹1,50,000/month | 50–55% |
Salaried, high income band | 55–65% |
Self-employed / business borrower | 45–55%, usually with a DSCR test alongside |
Microfinance borrower | 50% — this one is regulatory, on monthly household income |
Loan against property / secured | Higher tolerance, offset by LTV |
Only the microfinance line is law. RBI requires each regulated entity to have "a board-approved policy regarding the limit on the outflows on account of repayment of monthly loan obligations of a household as a percentage of the monthly household income," capped at 50% (RBI Microfinance Directions, para 5.1). Everything else in the table is a credit policy choice that a supervisor will ask you to evidence, not defend.
Worked example 1: salaried applicant with a co-borrower and a guarantee
Priya Nair, salaried, applying for a ₹25,00,000 personal facility at 10.5% over 84 months. Spouse joins as co-borrower. CIR pulled 20 August 2026. Constructed example, not a real borrower.
Income side
Item | ₹ per month |
|---|---|
Applicant gross salary | 1,45,000 |
Less PF | (10,800) |
Less professional tax | (200) |
Less TDS | (18,500) |
Applicant net salary | 1,15,500 |
Annual bonus, 3-year average ₹4,80,000 → monthly | 40,000 |
Admitted at 50% policy haircut | 20,000 |
Co-borrower net salary | 62,000 |
Admitted monthly income | 1,97,500 |
Obligation side, taken from the bureau report
Row | Obligation | ₹ per month |
|---|---|---|
1 | Housing loan EMI (joint, counted 100%) | 38,400 |
2 | Car loan EMI | 18,200 |
3 | Personal loan EMI | 19,800 |
4 | Credit card, ₹2,84,000 outstanding at 5% minimum | 14,200 |
| Existing subtotal | 90,600 |
5 | Proposed EMI, ₹25,00,000 @ 10.5% × 84 months | 42,152 |
| Total obligations | 1,32,752 |
Step 1 — the proposed EMI. Monthly rate = 10.5% ÷ 12 = 0.00875. (1.00875)^84 = 2.07883. EMI = 25,00,000 × 0.00875 × 2.07883 ÷ (2.07883 − 1) = 45,474.31 ÷ 1.07883 = ₹42,152
Step 2 — FOIR on the net basis. 1,32,752 ÷ 1,97,500 = 0.6722 → 67.22%
Step 3 — the same file computed on gross income, as a careless spreadsheet would: income = 1,45,000 + 40,000 (full bonus) + 62,000 = ₹2,47,000. 1,32,752 ÷ 2,47,000 = 0.5375 → 53.75%
Same borrower. Same debt. 13.5 percentage points, purely from the basis chosen. On a 55% cap, one version approves and the other declines.
Step 4 — the guarantee. Priya guarantees a ₹18,00,000 business loan for a relative, EMI ₹41,000, currently 47 days past due. At 100% weight: (1,32,752 + 41,000) ÷ 1,97,500 = 1,73,752 ÷ 1,97,500 = 87.98%
Given the account is live-delinquent, a 0% weight is not defensible. This is the number the memo has to argue with.
Step 5 — what the file actually supports. At a 55% cap on the net basis, and setting the guarantee aside for a moment: Maximum permitted obligations = 0.55 × 1,97,500 = ₹1,08,625 Less existing obligations of ₹90,600 → headroom = ₹18,025 per month EMI per ₹1,00,000 at 10.5% × 84 months = 42,152 ÷ 25 = ₹1,686.08. Supportable loan = 18,025 ÷ 1,686.08 = 10.69 → ₹10.69 lakh, against ₹25 lakh requested.
The answer is not "declined". It is "₹10.7 lakh, or ₹25 lakh at a longer tenor if policy allows, and neither until the guaranteed account's arrears are explained."
How does FOIR interact with DSCR for a business borrower?
For a proprietor or a partner, FOIR and DSCR measure the same rupee twice, because the household is funded out of the business.
Vaayu Traders, proprietorship. Business EBITDA ₹48,00,000 a year. Existing term debt service ₹21,60,000. Proposed term debt service ₹9,60,000. Proprietor's personal EMIs from the consumer CIR: housing ₹38,400 + car ₹18,200 = ₹56,600 a month = ₹6,79,200 a year. Annual drawings ₹18,00,000.
- Business-only DSCR: 48,00,000 ÷ (21,60,000 + 9,60,000) = 48,00,000 ÷ 31,20,000 = 1.54x — comfortably through a 1.25x covenant.
- Global DSCR, personal debt added: 48,00,000 ÷ (31,20,000 + 6,79,200) = 48,00,000 ÷ 37,99,200 = 1.26x — still through, barely.
- Global DSCR with household living costs as a prior claim: drawings less personal EMIs = 18,00,000 − 6,79,200 = ₹11,20,800 of living expenses. Cash available = 48,00,000 − 11,20,800 = ₹36,79,200.
36,79,200 ÷ 37,99,200 = 0.97x — below one.
Three defensible methods, three different answers, and only the third one asks whether the family can eat and service the debt in the same year. Pick your variant deliberately and name it in the memo — the same discipline set out in the DSCR formula variants guide. The corresponding personal FOIR here is 6,79,200 ÷ 18,00,000 = 37.7% of drawings, which looks fine in isolation and is meaningless without the DSCR beside it.
What should a FOIR calculator actually compute?
[EDITORIAL: embed the interactive FOIR calculator tool here. Do not publish this page without it — the primary keyword intent is a tool, not an explainer.]
The tool the page needs, specified so it can be built rather than described:
Inputs — income block
- Applicant gross salary; PF, professional tax and TDS deductions (auto-computes net)
- Variable pay: three-year average, with a policy haircut field defaulting to 50%
- Rental income, with an admitted-percentage field defaulting to 75%
- Business income: PAT + depreciation + interest on refinanced debt
- Co-applicant income, with a toggle for whether the co-applicant is a co-borrower
Inputs — obligation block
- Repeating rows: lender, facility type, EMI, ownership type (individual / joint / guarantor)
- Credit card outstanding, with a minimum-due percentage field defaulting to 5%
- Overdraft limit, with an interest-servicing basis
- Proposed loan: amount, rate, tenor → the calculator derives the EMI
Outputs
- FOIR on the net basis and the gross basis, side by side
- FOIR with and without guarantee obligations included
- Headroom in rupees per month against a user-set cap
- Maximum supportable loan amount at the entered rate and tenor — the number the borrower and the relationship manager both actually want
- A one-line audit trail per obligation showing which bureau row it came from
The last item is the difference between a calculator and a credit tool. A FOIR of 67.22% that cannot say which tradeline produced each rupee is not evidence.
Is FOIR the same as debt-to-income ratio?
Related, not identical.
| FOIR (India) | DTI (US) |
|---|---|---|
Numerator | Fixed monthly obligations including proposed EMI | Monthly debt payments |
Denominator | Usually net monthly income | Usually gross monthly income |
Card treatment | Minimum amount due | Minimum payment |
Typical threshold | 40–60%, lender policy | 43% under the US ATR/QM framework |
Regulatory force | None, except the 50% microfinance cap | Codified in mortgage rules |
Because FOIR is normally computed on net income and DTI on gross, a 50% FOIR is a materially tighter test than a 50% DTI on the same borrower. Never carry a threshold across from one framework to the other.
FAQ
How is FOIR calculated?
Add every fixed monthly obligation — existing EMIs, the credit card minimum due, and the EMI on the loan being applied for — and divide by monthly income, then multiply by 100. The arithmetic takes a minute; deciding what belongs on each side takes the rest of the file.
What FOIR do Indian lenders allow?
Most sit somewhere between 40% and 60%, rising with income band and falling for unsecured products. It is a board-approved policy limit rather than a regulatory one, so it varies between lenders and can be overridden by a deviation authority.
Is FOIR the same as debt-to-income ratio?
They measure the same idea but not the same way. FOIR in India is usually computed on net income, while DTI in the US is computed on gross, so the same borrower will show a higher FOIR than DTI. Do not carry a threshold across.
Should I use net or gross income for FOIR?
Net, unless your credit policy says gross in writing — and then apply gross consistently on both sides. The worked example above moves 13.5 percentage points on that choice alone.
Do credit cards count in FOIR?
Yes. Use the minimum amount due on the outstanding balance, commonly modelled at 5%. A card that the borrower says they clear every month is still a live revolving obligation with a contractual minimum.
Should a guarantee be included in FOIR?
Include it, and set the weight by looking at the guaranteed account's payment history. A guarantee on a clean 36-month account may justify a haircut; a guarantee on an account already 47 days past due is a real obligation you are about to inherit.
Is there an RBI limit on FOIR?
Only for microfinance, where household repayment outflows are capped at 50% of monthly household income across all loans, existing and proposed. Everywhere else RBI requires you to have board-approved limits, not any particular number.
How does FOIR apply to a self-employed borrower?
It applies to the household side, on drawings rather than salary, and it has to be read next to the business DSCR. Otherwise the same rupee of business cash gets counted once as income for the family and once as coverage for the loan.
Key takeaways
- The formula is one line; the decisions are on both sides of it. Net against net, gross against gross, and never mixed.
- The proposed EMI always sits in the numerator. A FOIR without it is not an underwriting number.
- The only regulatory FOIR-style cap in India is the microfinance 50% of household income. Everything else is a board-approved policy limit you must be able to evidence.
- Guarantees decide files. Weight them by the guaranteed account's DPD grid, and write the reason into the memo.
- For a proprietor, FOIR without DSCR is meaningless — the household and the business are drawing on the same cash.
Run one borrower through the analyzer — bring a real CIR and twelve months of statements, and see the obligation side of FOIR built from tradelines and debits with every figure traceable to its source.
Related: reading the CIBIL report the obligations come from, the DPD grid that sets the guarantee weight, finding the EMI that only the bank statement knows about, and where FOIR sits in the MSME underwriting process.
