What is considered a "reasonable" debt-to-income ratio for most consumers?

A debt-to-income (DTI) ratio is a crucial metric used by lenders to evaluate a consumer's ability to manage monthly payments and repay debts. A reasonable DTI ratio typically indicates that a consumer is not over-leveraged and can comfortably meet their financial obligations.

For most consumers, a DTI ratio below 36% is considered a healthy benchmark. This level suggests that no more than 36% of a person’s gross monthly income is allocated to debt payments. This threshold provides a balance that allows individuals to manage their debts while still maintaining financial flexibility for other responsibilities, such as living expenses and savings.

When the DTI ratio exceeds 36%, particularly if it approaches or exceeds 50%, lenders may view the consumer as a higher risk because they may have limited capacity to absorb unexpected expenses or financial changes. Therefore, maintaining a DTI ratio below 36% is often recommended to enhance the chances of loan approval and to ensure financial stability.