What term describes total debts as a percentage of gross monthly income?

The term that accurately describes total debts as a percentage of gross monthly income is known as the Debt to Income Ratio. This ratio is a crucial metric used by lenders to evaluate a borrower's ability to manage monthly payments and repay debts. It provides insight into how much of a borrower's income is being consumed by debt obligations, thereby helping lenders assess the risk associated with extending a mortgage loan.

In this context, the Back End Ratio specifically refers to the proportion of a borrower's total monthly debt payments (including the mortgage, car loans, credit card payments, etc.) relative to their gross monthly income. This is distinct from the Front End Ratio, which only considers housing costs such as the mortgage payment, property taxes, and homeowners insurance as a percentage of gross income.

Understanding these distinctions is vital for mortgage loan officers as they help lenders make informed decisions about lending based on the borrower's financial health.