Calculate your DTI ratio — the metric lenders use to judge loan affordability.
Debt-to-income ratio is your total monthly debt payments divided by your gross monthly income, expressed as a percentage. Lenders use it as a quick test of whether you can absorb another repayment. In India the same idea is usually called FOIR, the fixed obligation to income ratio, and most lenders want it to stay somewhere around forty to fifty per cent after the new loan is added, though thresholds vary by lender and loan type.
Two details change the answer more than people expect. The ratio uses gross income, before tax and deductions, which makes it look more comfortable than your actual take-home position — your real affordability is tighter than the ratio implies. And what counts as debt is narrower than you might assume: loan EMIs, credit card minimum payments and other fixed obligations count, while groceries, utilities, fuel and school fees usually do not, even though they consume income just as reliably. A ratio a lender is happy with can still leave you stretched.
Arjun earns ₹1,00,000 a month before tax. He pays a car loan EMI of ₹15,000, a personal loan EMI of ₹12,000 and an average of ₹8,000 on credit card dues. His total monthly debt payments are ₹35,000, so his debt-to-income ratio is 35,000 ÷ 1,00,000 × 100 = 35%.
If he applies for a home loan with an EMI of ₹25,000, his ratio would rise to 60%. Many lenders become cautious well before that level, so he could either borrow less, choose a longer tenure, or clear the personal loan first.
Last reviewed: 5 November 2026 by the YogiCalc team · How we calculate and verify · Spotted an error? Tell us
It varies by lender and product, but broadly under forty per cent is comfortable and forty to fifty per cent is where approval starts becoming harder. Above that, applications are frequently declined or offered at a worse rate.
Lenders treat it inconsistently. Many include rent when assessing affordability for an unsecured loan but exclude it for a home loan, on the basis that the rent stops when you move into the property. Ask the specific lender how they treat it.
It is a lending convention that allows comparison across applicants with different tax situations. The practical consequence is that the ratio flatters your position, so judge your own comfort against take-home pay rather than the headline number.
Clear or consolidate small high-payment debts, avoid taking new credit in the months beforehand, and do not close old cards in the run-up since that can affect other parts of your credit profile. Raising income works too, but only once it is documented.
For most loan applications in India, lenders look at existing EMIs and card dues rather than rent. Rent still matters for your own budget, so include it when checking affordability.
Pay off the smallest loans or card balances first, avoid new borrowing before applying, and if possible add a co-applicant's income.