How Loan Eligibility is Calculated
Most banks allow your total EMI obligations to be 40–50% of your net monthly income (called FOIR — Fixed Obligation to Income Ratio). This calculator works backwards from your EMI capacity to find the maximum loan amount.
Max Loan = EMI × [(1+r)ⁿ − 1] / [r × (1+r)ⁿ]
Where r = monthly rate, n = months
Example
Income $60000/month, 40% FOIR, 9% for 20 years
Max EMI = 60,000 × 40% = $24000
Max Loan ≈ $26.7 thousands
What is FOIR?
Fixed Obligation to Income Ratio is the percentage of your net income that banks allow for total EMI payments. Typically 40–50% for salaried individuals.
What other factors affect eligibility?
Credit score (750+ is preferred), age, employment type, existing debts, and the bank's own policies all affect your final loan eligibility beyond just income.