Basically it is a ratio of debt vs assets. Many lenders view this ratio as a way to determine the company’s / persons financial strength. A lender will view a person with small debt vs large assets much better then a person with a lot of debt and very little assets. It is pretty much common sense, for example;
You have 10,000 debt but have 100,000 in assets thus you have a 1/10th Debt Ratio (10%). A lender has a breaking point such as .43 in FHA / Fannie Mae, once reached you are disqualified from the loan. So keep debts down as it can disqualify you for an investment opportunity.