Question 1

What is FOIR and how does it affect loan eligibility?

Accepted Answer

FOIR (Fixed Obligation to Income Ratio) is the percentage of your monthly income that goes toward EMIs and other fixed obligations. Banks typically allow a FOIR of 40-60%. A lower FOIR means higher loan eligibility.

Question 2

How do banks calculate loan eligibility?

Accepted Answer

Banks consider your monthly income, existing EMIs, credit score, age, employment type, and the loan interest rate and tenure. The key formula is: Max EMI = (Monthly Income x FOIR) - Existing EMIs, then the loan amount is derived from the EMI using the standard loan formula.

Question 3

How can I increase my loan eligibility?

Accepted Answer

You can increase eligibility by: paying off existing debts to reduce FOIR, adding a co-applicant's income, choosing a longer tenure, improving your credit score, or showing additional income sources like rental income or bonuses.

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