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NISM Certifications · NISM-Series-X-A: Investment Adviser (Level 1) · Debt Management and Loans

Caselet: Arjun, 35, earns Rs 1,00,000 net per month. He has a car loan EMI of Rs 12,000 and a personal loan EMI of Rs 8,000. He applies for a home loan whose lender caps FOIR at 50%. Ignoring other factors, what is the maximum EMI the lender can sanction on the new home loan?

The maximum new EMI is Rs 30,000. A 50% FOIR on Rs 1,00,000 income allows total obligations of Rs 50,000, and existing EMIs of Rs 20,000 must be deducted from this. Ignoring existing loans would wrongly give Rs 50,000.

  1. ARs 30,000Correct
  2. BRs 50,000
  3. CRs 20,000
  4. DRs 38,000

Explanation

Maximum total obligations = 50% x 1,00,000 = Rs 50,000. Existing EMIs = 12,000 + 8,000 = Rs 20,000. Room for the new EMI = 50,000 - 20,000 = Rs 30,000. Rs 50,000 ignores existing loans, and Rs 38,000 subtracts only the car loan from 50,000.

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