The percentage of your monthly EMI expenses compared to your monthly gross earnings is known as the EMI to income ratio. It is also called Fixed Obligation-to-Income Ratio, FOIR. It shows the portion of your income that is used to pay back loan EMIs, including personal, auto, and home loans. But do you know what the ideal EMI to salary ratio is? It is 30% to 40% of your salary.
What is EMI to Income Ratio Meaning?
It is a critical metric lenders use to assess how much of your monthly earnings are already committed to debt repayment. Most lenders recommend that all your EMIs should not exceed 40% of your net monthly income. They calculate this ratio by dividing the sum of existing EMIs (including the new loan proposal) by your monthly take‑home pay.
For example, if your net salary is Rs 100,000 per month, your total EMI obligations should ideally stay between Rs 30,000 and Rs 40,000. Exceeding this threshold could stretch your finances thin. It leaves little room for other expenses and increases the risk of default.
Thus, keeping EMIs within the expected ratio helps in better budgeting, a faster loan approval process, and even favorable interest rates.
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What is EMI to Income Ratio?
ravi
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5 months
2025-07-13T07:35:26+00:00 2025-07-13T07:35:28+00:00Comment
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