How Lenders Determine How Much You Can Borrow
Ever wondered why two people with similar salaries receive different loan sanction offers? Lenders apply algorithmic risk assessment models influenced by multiple distinct factors:
1. Credit Score (CIBIL / Experian)
Your credit score reflects your historical repayment discipline. Scores above 750 signal low credit risk, unlocking lower interest rates and faster sanctions.
2. Fixed Obligation to Income Ratio (FOIR)
FOIR measures what proportion of your monthly take-home salary is already committed to existing EMIs. Most lenders cap FOIR at 40% to 50%. Lower existing obligations directly increase your fresh borrowing limit.
3. Employer Category & Employment Stability
Working with established multinationals, Fortune 500 corporations, or government bodies provides higher job security ratings, whereas frequent job switching can raise underwriting flags.
4. Age and Remaining Working Years
Younger applicants typically qualify for longer tenures (up to 30 years for home loans), keeping monthly EMIs low and enhancing maximum permissible loan limits.