Veteran Administration loans (VA loans) are one of the best deals available for veteran homebuyers. VA loans have flexible underwriting and down payment guidelines for veterans and their spouses. Many veteran homebuyers have questions about how VA home loans work and if they can qualify.
Qualifying For A VA Loan
The Debt-to-Income (DTI) ratio is one of the most common measures that lenders use to determine how qualified homebuyers are for a loan. The DTI ratio compares the amount of money a homebuyer earns monthly to the amount they spend on recurring expenses (including the new mortgage payment).
For example, a DTI ratio of 25% indicates that a fourth of a homebuyer’s income goes towards their recurring expenses.
While many other loan programs focus heavily on DTI ratios, VA financing can be a bit more lenient in this regard. Most of the qualification guidelines for VA financing focus on “Residual Income” if the homebuyer’s DTI ratio is over 41%.
Residual income is the amount of income homebuyers have at the end of each month after they’ve paid all of their monthly expenses (mortgage payments, credit card bills, car loans, daycare, etc.). Unlike DTI ratios, residual income looks at the net income.
How To Get Pre-Approved For A VA Loan
If homebuyers are planning to use a VA loan to purchase a home in California or Texas, they should get pre-approved before they start the house hunting. JVM Lending’s Mortgage Analysts are VA loan experts and are happy to provide scenarios to help veterans figure out what they can afford to buy with a VA loan.
Fully underwritten pre-approvals at JVM allow homebuyers to make non-contingent offers, ensure there are no major issues missed, and allow homebuyers to close in 14 days with JVM Lending. Pre-approvals make homebuyers far more competitive when they make offers and make the process of buying a home stress-free for everyone.
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Need A VA Loan To Purchase A Home?
This blog covers the very basics of how VA home loans work; our team is available if you have any questions or would like more information about VA loans. JVM Lending is a local lending company serving California, Texas, and Arizona. If you are interested in purchasing a home with a VA loan, our team of experts is available by phone at (855) 855-4491 or by email at jvmteam@jvmlending.com. Contact us today if you have questions about getting pre-approved or applying for a mortgage!
