How To Calculate Fixed Obligation to Income Ratio (FOIR) in Loans ?

Fixed Obligation to Income Ratio is an important parameter in Loan calculation while maintaining Rating Chart. 

Procedure for FOIR Calculation : In FOIR calculation, the Bank takes into account the installments of all other loans previously availed of by the customer, including the home loan applied for.

FOIR ratio includes all the fixed obligations that the customer is supposed to pay regularly on a monthly basis. The Fixed Obligations however, do not include statutory deductions from the salary like Provident Fund, Professional Tax and deductions for investment like Voluntary Provident Fund, Insurance Premiums, Recurring deposits etc.

For example:

Income -Rs 50,000 p.m.

Car loan installment: Rs 8,000 pm

Fridge loan installment: Rs 2,000 pm

Proposed housing loan installment: Rs 15,000 pm

FOIR = [sum addition of all installment i.e. Car, Fridge, Housing /50000 or 50 % or 0.05 i.e. Rs 25,000.]

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Bank’s have different standard for FOIR. The loan amount and rate of Interest are greatly vary based on FOIR rating of borrower.


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