Friends, FOIR (Fixed Obligation to Income Ratio) is a very powerful tool in financial terms when it comes to home loans.
But is the FOIR limit different for salaried and self-employed individuals?
If yes, why?
And how does it directly impact your home loan approval?
Let’s understand this mystery in simple terms today.
What is FOIR? (Simple Explanation)
FOIR stands for Fixed Obligation to Income Ratio—that is, the percentage of your income that goes towards your monthly loan repayments (like EMIs, credit card bills, personal loan EMIs, etc.).
👉 Formula: –
FOIR = (Total Monthly Obligations ÷ Gross Monthly Income) × 100
For example—
If your monthly income is ₹80,000 and your EMIs and other payments are ₹32,000,
then your FOIR would be:
(32,000 ÷ 80,000) × 100 = 40%
This means that 40% of your total income is already going towards EMIs.
Why do banks/finance companies look at the FOIR? (Importance in Home Loans)
Banks and NBFCs assess your loan eligibility based on the FOIR.
A high FOIR means you are already financially burdened.
A low FOIR means you have a higher EMI repayment capacity.
This is why the FOIR has a direct impact on loan approval or rejection.
FOIR limit for Salaried vs Self-employed Applicants
FOIR Limit for Salaried Applicants
Now let’s talk about salaried applicants.
Banks consider them more reliable because their income is stable and regular.
👉 Generally, the FOIR limit is:
40% to 50% (in some banks, it can go up to 55%).
That is, if someone’s salary is ₹1,00,000, then a loan of ₹40,000–₹50,000, including EMI and other obligations, can be considered.
FOIR Limit for Self-Employed Applicants
Now let’s talk about self-employed individuals—such as shop owners, freelancers, consultants, or businessmen.
Their income isn’t stable, sometimes high, sometimes low.
Therefore, banks adopt a more conservative approach towards them.
👉 Typically, the FOIR limit is:
35% to 45%.
This means that a self-employed individual won’t receive as large a loan as a salaried applicant with the same income.
Why is the FOIR Limit Different?
From a bank’s perspective, stability is the most important factor.
A salaried person receives a fixed income every month—
but a self-employed person’s income depends on business demand, season, or market conditions.
Therefore, the bank maintains a small risk buffer to reduce the risk of EMI default.
🔹 Salaried = Stability → High FOIR (50%)
🔹 Self-Employed = Variable Income → Low FOIR (40%)
Conclusion
If you’re applying for a home loan, first calculate your FOIR.
If you’re self-employed, try to keep your EMI burden below 40%.
Salaried applicants can manage their FOIR up to 50%.
People often think that simply having a high income is enough for loan approval—but in reality, FOIR is the real game-changer.
Whether you’re employed or running your own business—
if you understand and manage your FOIR,
Quickly Check your FOIR Now: – homeloanfoir.com
you’ll definitely have the keys to your “Dream Home”! 🏡✨