how much loan can I get on my salary?
a ₹50,000 monthly salary does not mean a ₹10 lakh loan. the bank's calculation and the borrower's comfort are two different numbers.
lenders look at take-home pay, existing EMIs, credit score, and how long the applicant has been employed. each bank has its own formula. some use a straight multiplier. others use the fixed obligation to income ratio (FOIR) method. the final sanction is almost always the lower of the two.
how the multiplier works
take net monthly income. multiply by a number between 10 and 27. that is the loan amount.
a ₹40,000 salary with a 15x multiplier gives ₹6 lakh. with a 20x multiplier, ₹8 lakh. the multiplier depends on the lender. some are conservative. some are aggressive. credit score and employment history push the number up or down.
the multiplier method does not account for existing loans. a person paying ₹10,000 in equated monthly instalments (EMIs) gets the same multiplier as someone with no EMIs. this is a significant limitation of the approach.
how FOIR works
FOIR stands for fixed obligation to income ratio. it measures what is already committed.
rent counts. credit card payments count. existing EMIs count. all fixed monthly outgo goes into the calculation.
a lender with a 50% FOIR cap looks at net income and subtracts existing obligations. the remaining amount is what the borrower can put toward a new EMI.
example: ₹1 lakh monthly income. ₹40,000 goes to rent and existing EMIs. that leaves ₹10,000 for a new EMI (50% of ₹1,00,000 minus ₹40,000). a ₹10,000 EMI over five years works out to roughly ₹6.5-7 lakh of loan, depending on the interest rate.
no existing obligations means the full 50%, or ₹50,000, can go toward the new EMI. that translates to a much larger loan.
FOIR calculation for a ₹30,000 salary
the numbers shift significantly based on existing monthly payments.
existing EMI of ₹8,000 cuts the eligible loan by nearly ₹2.2 lakh compared to ₹3,000 EMI.
other factors that affect the loan amount
credit score. a 750+ score gets better terms and a higher cap. a 650 score does not block approval. it does reduce the amount.
employment stability. six months at the same job is the minimum most lenders want. one year is better. gaps in employment or frequent switches raise red flags.
age. borrowers in their 20s and 30s get larger loans because they have more earning years ahead.
city. Mumbai and Delhi have higher cost of living. some lenders set higher minimum income requirements for these cities. that can mean slightly higher eligibility.
existing loans. every ongoing EMI gets deducted before the new loan is calculated. that applies to home loans, car loans, education loans, and credit card dues.
bank eligibility vs personal affordability
the bank approves based on what it can recover. that is not the same as what the borrower can comfortably repay.
a 50% FOIR leaves no room for surprises. a medical expense, a job gap, or a rent increase creates stress. the 35 to 40% range leaves room for savings and unexpected costs.
the loan amount that fits the bank's calculation may not fit the monthly budget. checking the budget before applying is more useful than checking the eligibility calculator.
what to check before applying
the last three months of bank statements should be reviewed to find the lowest post-expense balance. this serves as the baseline for affordability.
all existing EMIs, credit cards, buy-now-pay-later obligations, and rent should be included in the calculation.
the new EMI should be calculated using an online calculator and added to existing obligations. the total should stay under 40% of monthly income.
if it does not, the loan is too large.
frequently asked questions
1. how does the multiplier work for a ₹40,000 salary?
a ₹40,000 salary with a 15x multiplier gives ₹6 lakh. with a 20x multiplier, ₹8 lakh. the actual multiplier depends on the lender and the borrower's credit profile. most lenders use a multiplier between 10 and 20 for salaried employees.
2. can I include my spouse's income to get a higher loan amount?
some lenders allow joint applications. both incomes are combined, and both credit scores are checked. the loan amount increases accordingly. the lender applies the same FOIR cap to the combined income. not all lenders offer this option.
3. does a high credit score guarantee a higher loan amount?
a high credit score improves the terms and increases the multiplier. it does not override the FOIR calculation. existing obligations still limit the loan amount. a 750 score with high existing EMIs will get a smaller loan than a 700 score with no existing EMIs.
4. what is the minimum salary required for a personal loan?
most lenders require a minimum of ₹15,000 to ₹25,000 per month. the exact number varies by city and lender. Mumbai and Delhi have higher minimums. smaller cities have lower thresholds.
5. how much can I borrow if my salary is ₹25,000?
with a 15x multiplier, ₹3.75 lakh. with a 20x multiplier, ₹5 lakh. existing EMIs reduce this amount. the FOIR method applies the same cap. a ₹25,000 salary with ₹5,000 in existing EMIs and a 50% FOIR cap leaves ₹7,500 for a new EMI roughly ₹4.5 lakh over five years.
