Installment to Income Ratio is used to calculate the loan eligibility of the customer. This IIR denotes the portion of the customer’s monthly installment on the Home Loan or any other loan taken.
As a rule of thumb, the banks use 33.33 % to 40 % ratio.
For Example: IIR is 40%
Gross Income is Rs. 60,000/- per month
As per the IIR ratio, the customer is eligible for a loan where the installment does not exceed Rs. 24,000/-per month.