Certified Financial Planner (CFP) Practice Exam 2025 – All-in-One Study Guide for Exam Success!

Question: 1 / 505

What is the maximum acceptable percentage for a client's debt-to-income ratio?

30%

40%

The maximum acceptable percentage for a client's debt-to-income (DTI) ratio is generally considered to be around 40%. A DTI ratio of 40% indicates that 40% of a client's gross monthly income is allocated to debt payments. This level is often seen as a threshold for maintaining a healthy financial profile, as it balances the ability to manage debt while still leaving room for savings and other expenses.

Exceeding a 40% DTI can signal potential financial strain, making it more difficult for clients to qualify for new loans or credit. Lenders typically view a lower DTI as a sign of better financial health, suggesting that clients can handle their debts without excessive burden. Therefore, the 40% figure serves as a practical guideline for advisors and clients in evaluating debt levels relative to income.

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