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VA Loan Facts
VA MORTGAGE DEBT-TO-INCOME RATIO
According to VA guidelines, borrowers and / or their spouse must qualify according to set
debt ratios which are used to determine whether the borrower can reasonable be expected
to meet the expenses involved with home ownership.
TOTAL FIXED PAYMENT TO EFFECTIVE INCOME
Add up the total mortgage payment (principal and interest, escrow deposits for taxes,
hazard insurance, homeowners' dues, etc.) and all recurring
monthly revolving and installment debt (car loans, personal loans, student loans, credit
cards, etc.). Then, take that amount and divide it by the gross monthly income. The
maximum ratio to qualify is 41%. In the event the number exceeds the 41%, the VA
has a residual income guideline which can allow approval, yet are not considered a
compensating factor.
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Total amount of new house payment: |
$650 |
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Total amount of monthly revolving debt: |
$300 |
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Total amount of monthly recurring debt: |
$950 |
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Borrower's gross monthly income (including spouse, if married): |
$2,400 |
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Divide total house payment by gross monthly income: |
$950/$2,400 |
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Debt to income ratio: |
39.58% |
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Please note that the above indicators do not exclusively determine whether or not a
veteran will qualify for a VA loan. Compensating factors may affect the loan decision.
These factors are especially important when reviewing loans which are marginal with respect
to residual income or debt-to-income ratio. They cannot be used to compensate for
unsatisfactory credit.
Some compensating factors include, but are not limited to the following:
- Excellent credit history
- Conservative use of consumer credit
- Minimal consumer debt
- Long-term employment
- Significant liquid assets
- Military benefits and more
FREQUENTLY ASKED QUESTION # 33 [ -more VA Loan questions- ]
- - - - - -
Q: "Farm Loan"? - Can I buy a farm with a VA loan?
A: A veteran generally cannot get a VA loan to purchase a farm with one notable exception. If the farm has a residence where the veteran intends to live. There is no 'farming requirement' for this kind of purchase, but if the veteran does intend to operate a farm business as a major source of income for loan qualification purposes, it's required to show that the business can turn a profit. There are other options available to veterans who wish to operate a farm. The Farmers Home Administration does show preference to veterans, and can be used as a way to finance veteran-owned farm operations.
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VA Loan Rates
for 1/05/2009
30 year fixed
-----------------
0.000 points
5.000%
5.106% APR
15 year fixed
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0.000 points
6.500%
6.694% APR
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