What is generally considered a healthy debt-to-income ratio for borrowers?

A healthy debt-to-income (DTI) ratio is typically viewed as being below 36%. This figure indicates that a borrower is managing their debt responsibly relative to their income, which is an important factor for lenders when assessing the risk of lending money. A DTI below 36% suggests that a borrower has a good balance between income and debt obligations, making them more likely to afford additional borrowing, such as a mortgage.

Lenders often prefer borrowers with lower DTI ratios because this can signify good financial health and the ability to make monthly payments without financial strain. While some lenders may allow higher ratios in certain circumstances, exceeding 36% may lead to increased scrutiny and could potentially limit the amount offered or lead to higher interest rates.

Other options reflect either overly high debt levels or ratios that are too low to be practical for borrowers, thus not aligning with conventional standards for a healthy DTI.