There are many parameters that go into consideration while deciding the eligibility of an individual for approving a credit limit. One such important parameter is FOIR (FOIR full form is Fixed Obligations to Income Ratio).

FOIR is used by the bank to understand the repayment capacity of an applicant. It is also referred to as the debt to income ratio. While calculating the FOIR, the banks and financial institutions take into account the applicant’s income and the instalments of all the loans the applicant is currently paying. It also considers the Equated monthly instalment (EMI) of the new loan application as well.

Banks consider 50% of the income of an applicant to be required for living and lifestyle expenses and the rest of the income is only considered as disposable income. The ideal range for FOIR is between 40-55% but the actual figure will vary from bank to bank.

How is FOIR calculated?

FOIR is calculated as [Sum of existing fixed obligation/Monthly Income] * 100.

A lower FOIR means a person has fewer liabilities, increased disposable income, better repayment capacity, higher chances of approval. A higher FOIR score (>70%)implies that your chances of getting a loan drop substantially. Having a co-applicant in the loan will help you increase the chances of your loan getting approved.

Why is FOIR important in unsecured loans?

FOIR is particularly relevant when the loan in question is an unsecured loan, i.e, the loan has no collateral security involved. So to ensure that you have the financial capability to repay the borrowed loan, the respective bank/NBFC calculates the fixed obligations to income ratio to assess your personal loan eligibility.  FOIR is also used to adjust the interest rate for your education loan. A favourable FOIR will help in reducing the interest rate for your loan.


If you are interested in knowing more about availing an unsecured loan, please follow the following steps:

  1. Go to https://cynapse.co.in/discover
  2. Choose “Looking to Finance my International Education”
  3. Login with your Google credentials
  4. Fill in your basic details (2-3 mins)

After that, you’ll see banks/NBFCs that are suitable for your profile. You can initiate an eligibility check digitally from Cynapse to know for sure if you are eligible for an educational loan. A dedicated relationship manager will also be assigned to you to guide you as well, all at zero cost to the student.