Calculate your Debt-to-Income (DTI) ratio — the key metric banks use to assess loan eligibility. Enter your gross monthly income and all existing debt payments.
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Use pre-tax income. Banks assess eligibility on gross income, not take-home.
Include every EMI and minimum payment — car, personal loan, credit cards.
See whether the new loan keeps your DTI within acceptable limits.
Banks in India use FOIR (Fixed Obligation to Income Ratio) — equivalent to back-end DTI. Most Indian banks allow up to 50-55% FOIR. US mortgage lenders use 43% as the standard limit for qualified mortgages.
Indian banks typically allow 40-50% FOIR (equivalent to back-end DTI). US lenders use 43% as the standard limit for qualified mortgages. Lower is always better — below 36% is considered excellent.
DTI itself is not in your credit score, but high debt utilisation (related) does affect it. Banks check DTI separately during loan underwriting. A high DTI is a rejection reason even with a good credit score.
Two ways: reduce debt payments (pay off loans, avoid new debt) or increase income. Pay off the highest-EMI loan first for the biggest DTI improvement. Closing a credit card reduces available credit but also removes minimum payment obligations.
DTI (Debt-to-Income) is the US term. FOIR (Fixed Obligation to Income Ratio) is the Indian equivalent — same calculation, different name. Both measure total fixed monthly debt obligations as a percentage of income.
Most lenders require a DTI ratio below 43% for mortgage approval. The ideal is below 36%. Front-end DTI (housing costs only) should ideally be under 28%.