The Fixed Obligations to Income Ratio (FOIR) is a metric used by banks and other financial institutions to assess an individual's loan eligibility. FOIR is calculated by considering fixed monthly expenses and by keeping out statutory deductions, such as Provident Fund, Investment Deductions, and Professional Tax.

🔸How is FOIR calculated on a personal loan?

If an individual's FOIR is 50 per cent, it signifies that a maximum of 50 per cent of the individual's monthly earnings is presumed to be their living expenses before the bank disburses a personal loan, home loan, auto loan, or any other type of loan. As a result, the bank will consider the remaining portion of the income when determining the loan amount that the person is entitled to.

🔸You can calculate FOIR using the following formula:

FOIR = Fixed Monthly Expenses / Monthly salary

➡️Bottom Line:- Keep all your monthly living expenses less than 50% of your monthly Income to get your Loan approved easily.
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