Understanding your FOIR is one of the most important steps before taking a loan. Many people face loan rejections simply because they don’t know how to check this simple number. In this guide, you will learn how to calculate it in minutes and why it really matters.
What is FOIR?
FOIR stands for Fixed Obligation to Income Ratio. It shows how much of your income is already used for monthly expenses like EMIs, rent, and credit card bills. Lenders take into account FOIR when determining your ability to safely take an additional loan.
Hence, the calculation of FOIR becomes an essential process before any loan application.
The Importance of FOIR
A high FOIR indicates that the major part of your salary is already tied up in obligations. A low FOIR means that you have sufficient financial space to accommodate a new EMI. The common range of preference for lenders is FOIR between 40% and 55%.
Platforms like Olyv help the borrowing individuals in understanding their monthly limits effortlessly. First-time borrowers could find it quite easy to manage FOIR with the simple dashboards and pre-check tools offered by these platforms.
The Easy Way to Calculate FOIR
Here is the commonly used formula,
FOIR = (Total Monthly Obligations ÷ Net Monthly Income) × 100
Total obligations include,
- Existing EMIs
- Credit card minimum dues
- Monthly rent
- Other loan payments
Let’s see an example,
| Item | Amount (₹) |
| Net Monthly Income | 40,000 |
| Existing EMI | 6,000 |
| Credit Card Bill (Minimum Due) | 2,000 |
| House Rent | 8,000 |
In this case,
Total Obligations = 6,000 + 2,000 + 8,000 = 16,000
FOIR = (16,000 ÷ 40,000) × 100 = 40%
This FOIR calculation shows the borrower is within the ideal range and can likely qualify for a new loan.
Ideal FOIR Range for Loan Approval
| Lender Type | Ideal FOIR Range | Approval Notes |
| Banks | 40–50% | Strict about income stability |
| NBFCs | 45–55% | More flexible, faster approvals |
This is why checking FOIR calculation in advance helps avoid surprises.
How to Reduce Your FOIR
In case your FOIR goes beyond 55%, the lenders will most likely not approve your credit request. However, it can be improved with little effort,
Settle small debts first
This will lessen your monthly obligation ratio quickly.
Limit credit card spending
The high credit balance on your cards significantly adds to your FOIR.
Select a longer loan period
A longer period results in a lower EMI and makes the checking of your loan eligibility favourable.
Apply through advanced digital platforms
Apps like Olyv use advanced scoring tools that give you better chances even if your FOIR is slightly high.
Most Common Errors Committed by People
Not considering rent in FOIR
Several loan applicants believe that only EMIs are taken into account. But, rent is also a fixed obligation.
Considering gross salary as income
FOIR is always calculated on net income (take-home).
Submitting a loan application without performing a FOIR check
This results in unnecessary refusals and delays.
Doing your FOIR calculation beforehand makes you a confident borrower.
Conclusion
Calculating FOIR is one of the easiest ways to know if you are loan-ready. By understanding your monthly obligation ratio, doing a quick loan eligibility check, and making a proper FOIR calculation, you can avoid loan rejection and get better offers.
Platforms like Olyv make this process even simpler and transparent with faster checks and smarter insights.
When you understand your FOIR well, you borrow smarter, repay comfortably, and make financially safe decisions.
