Gregorio is correct. This is not technically "rental" income since she lives in the home too. This is considered "boarder" income.
On a conventional loan, boarder income is not permitted unless you meet the exception below. FHA, in some cases, allows boarder income though. It has to be documented on her tax return though, and the boarders need to be related by blood, marriage, or law. If those circustances don't apply either, it can't be used to bolster income.
When approving a mortgage, lenders look not only at the mortgage payment as a percentage of income, but also her other debts combined with the mortgage, such as car payments, credit cards, and student loans.
48% is super high for just the house. That''s about the limit for ALL debts (sometimes you can go up to 50%).
If she can get a relative with good income and credit to co-sign on the loan with her then FHA might be an option. Other than that I don't see any good solutions unless she wants to sell the home.
You are right to not sign a quit claim. If you are on the mortgage currently then why should you give up any interest in the home when you are still liable on the mortgage?