There’s a reason why more than 740,000 Veterans and their families chose to use their VA loan benefits in 2017 alone. It’s possible to restore entitlement from a prior loan and use it again, making VA loans a benefit for life. Whether you’re buying your first home, needing more space for your growing family, or downsizing as an empty nester, the VA homebuying benefit can be used over and over. Instead, the underwriter will consider the ratio in conjunction with all other credit factors listed above.Home Loan Benefits for Every Stage of Life It should not automatically trigger approval or rejection of a loan. It is merely a guide and, as an underwriting factor, it is secondary to the residual income. * The US Department of Veteran Affairs debt-to-income ratio is a ratio of total monthly debts’ payments (housing expense, installment debts, etc.) to gross monthly income. Region Key For VA Home Loan Residual Income Northeast The amount of liquid assets required will vary and is subject to the underwriters discretion. If the borrower makes a down payment, their VA Loan Funding Fee will be reduced. Liquid Assets / Down Payment:Īlthough a down payment is not required, liquid asset reserves or the ability to make (or offering of) a down-payment is a factor that can increase the chances of loan approval. In the event that income is not sufficient to meet residual guidelines or the debt to income ratio preferred by the underwriter is in excess, employment stability with minimal gaps can be used to help compensate.
Please note: Each lender does have their own credit requirements. The components that are reviewed, evaluated and scrutinized by the VA underwriter include: Credit history and use of credit:Īlthough there is no credit score requirement for a VA loan, the borrower should show conservative / minimal use of credit to exceed the underwriters normal threshold of the debt ratio. Because individual circumstances vary, each borrowers entire financial situation is reviewed. The VA debt to income ratio is not set at a maximum rate. Residual Income Requirements For VA Home Loans For loan Amounts $79,999 and below, the residual income must exceed: Family Sizeįor Loan Amounts of $80,000 and above the residual income must exceed: Family Sizeįor an explanation of areas, see the chart below. As a standard policy, residual income usually must be equal to, or above the amount below in the event that the borrowers debt to income ratio exceeds 61%. Sufficient residual income is used with debt to income ratios to determine your individual maximum loan eligibility amount. This remaining amount is called residual income. In addition to this, you will need to have money for food, entertainment, housing maintenance expenses, etc.
To qualify for a VA home loan, you must be able to afford the payment and any existing debt you currently have. VA home loans do not offer a guaranteed loan approval.
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