FOIR, also known as Debt-to-Income (DTI) ratio, is a metric used by banks to determine a borrower's repayment capacity. It calculates the percentage of your monthly income that is currently spent on paying fixed debts (like existing EMIs, rents, and insurance policies).

Banks generally restrict your total monthly obligations (existing EMIs + proposed EMI) to a maximum of 40% to 60% of your net monthly salary (the FOIR limit). The remaining eligible EMI capacity is then used to compute the maximum principal loan amount you can borrow at the current interest rate and tenure.

A DTI ratio below 35% is considered Excellent. A ratio between 35% and 50% is Good/Moderate, while any ratio exceeding 50% is viewed as Risky/Overburdened by banks, which can lead to loan rejection or higher interest rates.