Getting rejected for a loan amount you thought you'd easily qualify for usually comes down to one formula banks rarely explain upfront: FOIR, or Fixed Obligation to Income Ratio.
FOIR: the formula banks actually use
FOIR is the percentage of your monthly income already committed to fixed payments — existing EMIs, credit card minimums, and the new loan's EMI combined. Most banks cap this at 40–50% of your gross monthly income. Cross that line and the application gets rejected outright, regardless of your credit score.
Why existing EMIs hurt more than you'd think
A ₹15,000 car EMI doesn't just reduce your eligibility by ₹15,000 worth of borrowing power — it reduces it by whatever multiple that represents against the cap. If your FOIR limit is 45% of a ₹80,000 salary (₹36,000), that car EMI alone has already used 40% of your entire borrowing capacity before a new loan is even considered.
Raising eligibility before you apply
A few levers actually move the needle:
- Close small existing loans — even a low-balance personal loan frees up FOIR headroom disproportionate to its size.
- Add a co-applicant's income — most banks combine household income for FOIR calculations, which can meaningfully raise the ceiling.
- Extend the tenure — a longer tenure lowers the EMI for the same loan amount, which lowers FOIR usage, though it increases total interest paid.
- Time it after a raise — eligibility is recalculated fresh each application; a recent appraisal letter can shift the math immediately.
Run your own numbers first
Rather than finding out your FOIR ceiling from a rejection letter, use our Loan Eligibility Calculator to see your maximum eligible amount, current DTI, and how a tenure or income change shifts it — before a hard inquiry shows up on your credit report.