How Much Loan Can You Afford?
Most banks use the FOIR (Fixed Obligation to Income Ratio) rule: your total monthly EMI obligations should not exceed 40–50% of your net monthly income.
Affordability Guide by Salary
- ₹30,000/month: Max EMI ~₹12,000–15,000 → Eligible loan: ~₹12–15 lakh at 9% for 15 years
- ₹50,000/month: Max EMI ~₹20,000–25,000 → Eligible loan: ~₹20–25 lakh at 9% for 15 years
- ₹1,00,000/month: Max EMI ~₹40,000–50,000 → Eligible loan: ~₹40–50 lakh at 9% for 15 years
Factors Affecting Loan Eligibility
- Net monthly income (salary/business income)
- Existing EMI obligations (car, personal loans)
- CIBIL/credit score (minimum 650–700 for most banks)
- Age (loan must be repaid before retirement)
- Number of dependents
- Employment stability (salaried vs. self-employed)
Frequently Asked Questions
How do banks calculate how much loan I can get?
Banks use FOIR: Total monthly obligations (existing EMIs + new EMI) ÷ Net monthly income ≤ 40–50%. They also check CIBIL score, employment type, and age.
Can I get a bigger loan with a co-applicant?
Yes. Adding a co-applicant (spouse or parent) combines incomes, increasing eligibility. Both applicants' incomes and credit scores are considered.
How does existing debt affect new loan eligibility?
Existing EMIs reduce your eligible new EMI capacity. If your monthly income is ₹60,000 and you already pay ₹15,000 in car loan EMI, your maximum available EMI for a new loan is reduced to ₹9,000–15,000.
What is FOIR?
FOIR (Fixed Obligation to Income Ratio) = Sum of all fixed monthly obligations ÷ Gross monthly income. Banks prefer this below 40–50%.