Debt Ratio  is the most important parameter that is used to find out the loan eligibility of a person. It is calculated by a simple division of your monthly debt payments to your monthly income. A debt ratio of less than 35% is considered ideal since it gives so much room to do other things like investing.

There are 2 types of debt ratios :

Front-end ratio:This refers to the percentage of earnings that is paid for mortgage and related fees. Lenders want this to be no more than 30 percent of your gross monthly income; 28 percent is standard.

Back-end ratio: These are revolving monthly payments, such as Visa, MasterCard, car lease or loan payments, student loans, child support, alimony, monthly utilities.  The ratio should not be more than 36 percent.

For those with higher debt ratios but still needing a mortgage, the best option would be to make a higher down payment thus reducing the risk for the lender,thus inducing the lender to lend.

For people with higher debt ratios debt consolidation offers a potential remedy. it basically involves moving all your debt to a single source so as to reduce interest payments from high cost debt like credit cards. You may also use Debt Ratio Calculator.