banner banner

Stay Up-to-Date with Our Blogs & Articles

The texts on this website have been translated using an automated translation tool and its accuracy cannot be guaranteed. We recommend referring to the English version of the content for the most precise information. In the event of any disputes or inconsistencies, the contents in the English language shall be considered final and binding. IIFL HFL disclaims any liability or responsibility in this matter.
Go Back to Main blog page

Impact of Co-applicant and Existing Loans on Home Loan Eligibility

By Kakul Jain | Published On Mar 31 2023 7:33 AM 1 min read 289 views 1009 Likes

Obtaining a loan is often visualized as a painstaking and time-consuming chore involving a lot of paperback and compliances. 

In this article, we will guide how to avoid the hustle by being vigilant about eligibility computation and existing loans.

We will begin the discussion by understanding the Fixed Obligation Income Ratio (FOIR). 

In simple terms, FOIR can be understood as the proportion of the income available for EMI servicing.  

FOIR norms are determined by the institutions based on the factors like risk capacity, the profile of the customer, monthly income, collateral, credit score, and many more. 

Generally, FOIR ranges between 60%-70% for a salaried applicant and 80%-100% for a self-employed applicant.

Let’s understand FOIR with an assumption that you are a salaried employee having the following particulars:

  • Monthly Income: Rs. 1 Lac

  • Applicable FOIR as per the institution: 70%

  • Running EMI obligation: Nil

Now, the total amount available for servicing for EMI would be Rs. 70000 (Rs.1 Lac*70%).

FOIR has defined the maximum value that is available for servicing of all the EMIs. So, if you are currently serving other loans as well, the EMI of the loans will be deducted from the above amount. 

Let’s say, in the above example, if the EMI obligation already exists, the revised serviceable EMI value will be as under:

  • Eligible EMI: Rs. 70000 (Monthly Income * Applicable FOIR)

  • Existing EMI: Rs. 10000

The total amount available for servicing for the current EMI would be Rs. 60000 (Rs.70000-10000).

Now, we will talk about what can be done if the calculated amount is not in line with the loan requirements. 

You can have additional applicants added to your loan. Adding an applicant to your loan can enhance your income which eventually increases your loan. 

Family Income can be considered for the calculation of eligibility. However, only blood relatives are welcomed as co-applicant on the loan. Usually, BFSI industries authorize your spouse, your parents, your sibling, or your kids to join as a loan applicant. The norms may vary for the institutions.

Let’s see how with an additional income of a co-applicant, you can enhance your eligibility with the revised particulars in the above example:

  • Additional Income of the second Applicant: Rs. 50000

  • Applicable FOIR: 70%

  • Additional Eligible EMI: Rs. 35000(Rs.50000*70%)

Additional applicants supplemented the customer income and upgraded the serviceable EMI amount by Rs. 35000.  

With the above assessment beforehand, you can have an estimation of the eligible loan amount and proceed with your loan application accordingly.


apply loan

Quick and Hassle Free Loan Processing

green ad
Prelude to Building Green - IIFL Home Loan's Guide to Sustainable Affordable Housing
Download report

Disclaimer: The information contained in this post is for general information purposes only. IIFL Home Finance Limited (including its associates and affiliates) ("the Company") assumes no liability or responsibility for any errors or omissions in the contents of this post and under no circumstances shall the Company be liable for any damage, loss, injury or disappointment, etc. suffered by any reader. All information in this post is provided "as is", with no guarantee of completeness, accuracy, timeliness, or of the results, etc. obtained from the use of this information, and without warranty of any kind, express or implied, including, but not limited to warranties of performance, merchantability, and fitness for a particular purpose. Given the changing nature of laws, rules, and regulations, there may be delays, omissions, or inaccuracies in the information contained in this post. The information on this post is provided with the understanding that the Company is not herein engaged in rendering legal, accounting, tax, or other professional advice and services. As such, it should not be used as a substitute for consultation with professional accounting, tax, legal or other competent advisers. This post may contain views and opinions which are those of the authors and do not necessarily reflect the official policy or position of any other agency or organization. This post may also contain links to external websites that are not provided or maintained by or in any way affiliated with the Company and the Company does not guarantee the accuracy, relevance, timeliness, or completeness of any information on these external websites. Any/ all (Home/ Loan Against Property/ Secured Business Loan/ Balance Transfer/ Home Improvement Loan/ NRI Home Loan/ Home Loan for Uniformed Services) loan product specifications and information that may be stated in this post are subject to change from time to time, readers are advised to reach out to the Company for current specifications of the said (Home/ Loan Against Property/ Secured Business Loan/ Balance Transfer/ Home Improvement Loan/ NRI Home Loan/ Home Loan for Uniformed Services) loan.