Loan Eligibility Estimate
How Do Banks Calculate Loan Eligibility in India?
Indian banks use a metric called FOIR — Fixed Obligation to Income Ratio — to determine how much loan you can get. FOIR is the percentage of your net monthly income that goes toward fixed loan repayments. Most banks in India cap FOIR at 40% to 50% for salaried employees. For example, if your net salary is ₹80,000 and your existing EMIs are ₹10,000, your remaining FOIR capacity at 50% is ₹30,000. This becomes the maximum new EMI you can afford, and the eligible loan amount is back-calculated from this figure using the standard EMI formula.
Loan Eligibility Example by Salary
On a ₹50,000 net monthly salary with no existing EMIs and an 8.75% home loan rate for 20 years: maximum eligible EMI = ₹25,000 (50% FOIR). This translates to an eligible loan of approximately ₹26.3 lakh. On a ₹1,00,000 salary under the same conditions, the eligible loan approximately doubles to ₹52.6 lakh. Adding a co-applicant — a spouse with ₹40,000 income — would combine incomes and push eligibility to roughly ₹73.6 lakh. This is why joint applications are common for home loans in India.
What Factors Affect Loan Eligibility Beyond Salary?
Salary is the primary factor, but banks consider several others. Your CIBIL credit score is critical — a score above 750 typically gets you better rates and faster approval, while a score below 650 may result in rejection. Your employer category matters too — government employees and those at top-tier private companies are treated more favourably. Age affects tenure — a 55-year-old can only get a 5-year loan, reducing eligibility significantly compared to a 30-year-old who can take a 20-year tenure. Existing liabilities, number of dependants, and property type (for home loans) also factor in.
How to Increase Your Loan Eligibility
There are several practical ways to boost eligibility. First, add a co-applicant — combining incomes increases the FOIR base. Second, close or prepay existing loans before applying — every ₹5,000 reduction in existing EMIs adds approximately ₹5 lakh in home loan eligibility at current rates. Third, improve your CIBIL score by clearing credit card dues on time and reducing credit utilisation below 30%. Fourth, choose a longer tenure where possible — a 25-year tenure vs 15 years can increase eligible loan amount by 20–25%. Fifth, compare across banks — FOIR limits vary from 40% at conservative lenders to 60% at some NBFCs.
FOIR Limits Across Major Indian Banks
Different lenders apply different FOIR limits. SBI typically allows 50% FOIR for salaried customers. HDFC Bank and ICICI Bank generally apply 50% for most applicants, with flexibility up to 55% for high-income professionals. Housing finance companies like LIC Housing Finance may consider up to 55–60% for government employees. NBFCs tend to be more flexible on FOIR but may charge higher interest rates. Always check the specific lender's policy — this calculator uses 50% as the standard benchmark.
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Frequently Asked Questions
Banks use the FOIR (Fixed Obligation to Income Ratio) method — typically capping total EMIs at 40–50% of net monthly income. Your disposable income after existing EMIs is used to determine the maximum new EMI, which is then used to back-calculate the eligible loan amount using the EMI formula.
On a ₹60,000 net monthly salary with no existing EMIs, at 8.75% for 20 years, your maximum eligible EMI is ₹30,000 (50% FOIR). This makes you eligible for approximately ₹31.5–32 lakh. Adding a co-applicant or closing existing loans can increase this significantly.
FOIR (Fixed Obligation to Income Ratio) is the share of your income going toward loan EMIs. Most banks cap it at 50%. Example: salary ₹80,000, existing EMIs ₹15,000 → remaining FOIR capacity = ₹25,000 → this is your maximum new EMI, which determines your eligible loan amount.
Yes, significantly. A CIBIL score above 750 results in faster approval, lower interest rates, and higher eligible amounts. Below 650 may lead to rejection or significantly higher rates. Paying credit card bills on time and keeping credit utilisation below 30% are the fastest ways to improve your score.
Add a co-applicant to combine incomes, close existing loans to reduce FOIR, improve your CIBIL score, choose a longer tenure, or apply at an NBFC with higher FOIR limits. Every ₹5,000 reduction in existing EMIs adds approximately ₹5 lakh in home loan eligibility at current rates.