About the Loan Eligibility
Before approving a loan, a lender estimates how much EMI your income can support. This loan eligibility calculator applies the same logic. It takes your net monthly income, deducts the EMIs you already pay, applies a fixed obligation to income ratio (FOIR) to find the maximum new EMI, and converts that into the largest loan amount for the rate and tenure you choose.
Home buyers, car buyers and personal loan applicants use it to set a realistic budget before approaching a lender, which avoids rejected applications and unnecessary credit enquiries. Self-employed professionals and business owners can use their average monthly income for a first estimate, though lenders will assess them on income tax returns and financial statements rather than on a payslip.
Eligibility rises with income and tenure, and falls with existing EMIs and higher interest rates. The FOIR a lender allows varies with income level, loan type and credit profile, so the field is editable. The result is an indication of repayment capacity only. Lenders also consider your credit score, age, job or business stability and, for secured loans, the value of the property or asset.
How to use it
- 1Enter your net monthly income after tax and deductions.
- 2Enter the total of all EMIs you are already paying each month.
- 3Enter the interest rate and tenure of the loan you want.
- 4Adjust the FOIR if your lender uses a different percentage, then read the maximum EMI and loan amount.
How this is calculated
Maximum EMI = (Net monthly income × FOIR %) − Existing EMIs Maximum loan = Maximum EMI × [(1 + r)^n − 1] ÷ [r × (1 + r)^n] r = annual rate ÷ 12 ÷ 100, n = tenure in months. This is the EMI formula rearranged to give the loan amount that a given EMI can service.
Frequently asked questions
What is FOIR?
FOIR stands for fixed obligation to income ratio. It is the share of your net monthly income that goes towards fixed commitments such as loan EMIs and credit card dues. Lenders set a ceiling on it, and the new EMI has to fit within that ceiling after your existing obligations are counted.
How much loan can I get on my salary?
Multiply your net monthly income by the FOIR your lender allows, subtract existing EMIs, and the remainder is the EMI you can take on. The loan amount that EMI supports depends on the interest rate and tenure. The calculator does this in one step and shows the maximum loan.
How can I increase my loan eligibility?
Close or reduce existing loans and credit card balances, add an earning co-applicant such as a spouse, choose a longer tenure, and maintain a strong credit score. Declaring all regular income that can be documented, including rent or incentives, also helps. A longer tenure raises eligibility but increases total interest.
Do lenders only look at income when deciding a loan?
No. Income determines repayment capacity, but lenders also weigh your credit score and repayment history, age, the stability of your job or business, and the nature of your employer. For home and car loans, the amount is further capped as a percentage of the property or vehicle value.
How is eligibility assessed for self-employed applicants?
Lenders usually look at income tax returns for the last two or three years, audited or certified financial statements, bank statements and GST returns, and work out an average income from them. Consistent filings and clean banking records improve the outcome. Use your average monthly net income in this calculator for an approximate figure.