- Jumbo/Non Qm
Mortgage borrowers eligible for VA loans can calculate their debt to income ratio. The Veterans Administration, the VA, does not have a specific debt-to-income ratio cap on VA loans. Borrowers can get an approve/eligible per automated underwriting system (AUS) with over 60% DTI with lower credit scores as long as they have strong residual income. The Veterans Administration allows for manual underwriting on VA loans. The difference between the automated approval per AUS and manual underwriting is the cap on DTI with manual underwrites. VA manual underwriting restricts the debt-to-income ratio. You can use the VA DTI Mortgage Calculator to calculate your front-end and back-end debt to income ratio for manual underwriting for VA loans.
What Is Manual Underwriting on VA Loans
If you are a first-time homebuyer using your VA Eligibility for the first time, one of the questions may be what manual underwriting means. FHA and VA loans are the only two mortgage loan programs that allow manual underwriting. There are two types of VA mortgage loan processes. The first and most common VA loan approval process is when the borrowers get an automated approval per AUS.
Why Would a VA Loan Be Manually Underwritten?
One of the most frequently asked questions by borrowers on VA loans is why would a mortgage loan be manually underwritten? One of the main reasons why a VA loan is manually underwritten is when a borrower has no credit tradelines and/or no credit scores. If a borrower has no active credit tradelines, the borrower may not have a credit score reporting on credit bureaus. Mortgage underwriters can use nontraditional credit tradelines for borrowers who do not have traditional credit tradeliines reporting on the credit bureaus. Use the VA DTI Mortgage Calculator powered by GCA Mortgage to determine your debt-to-income ratio.
What Triggers a Manual Underwrite?
A borrower with an approve/eligible per the automated underwriting system (AUS) can be downgraded to a manual underwrite on a VA loan. Mortgage underwriters have full underwriter discretion to trigger a manual underwrite on a file that has been AUS approved. If the mortgage underwriter finds inconsistent income, little to no assets, substantial liability compared to income, and/or substantial collection and charged-off accounts, the file may be downgraded to a manual underwrite.
What Happens If I Cannot Get an Approve/Eligible Per Automated Underwriting System (AUS)
If the borrower does not get an approve/eligible per the automated underwriting system and gets a refer/eligible per AUS findings, the file can be manually underwritten. Manual underwriting is the process where a human mortgage underwriter is assigned to the file and thoroughly underwrites the file. The mortgage underwriter will be more thorough on manual underwrites when reviewing the borrower’s credit, credit history, income history, and the ability to pay the new mortgage loan. Use the VA DTI Calculator to determine what your debt-to-income ratio is on manual underwriting.
QUICK USEFUL LINK: How To Get Refer/Eligible To an Approve/Eligible Per AUS
Is Verification of Rent Mandatory on Manual Underwriting on VA Loans?
In general, all manual underwrites require verification of rent. The mortgage underwriter will review the borrower’s current rental payment history and require verification of rent (VOR). The difference between what the borrower is paying in rent and the new housing payment on the home purchase is called payment shock. A payment shock of 5% or less is considered a strong compensating factor. How about in cases where homebuyers are living rent-free with family to save rent? In cases where borrowers are living rent-free, Gustan Cho Associates will waive rental verification if they can get a living rent-free letter from the person who owns the home. The living rent-free letter will be provided by the lender.
QUICK USEFUL LINK: VA Guidelines on Verification of Rent on Manual Underwriting
VA DTI Manual Underwriting Guidelines
They meet the maximum 46.9% front-end and 56.9% back-end debt-to-income ratio cap on VA LOANS using the VA front-end and back-end mortgage calculator. The VA DTI Mortgage Calculator powered by Gustan Cho Associates (GCA Mortgage) has been designed for users to calculate their DTI in seconds. No need to keep on contacting your loan officer whenever there is a change in numbers while shopping for a home. Every mortgage loan program has its own front-end and back-end debt to income ratio requirement. With the VA DTI Mortgage Calculator, users can calculate the debt-to-income ratio for AUS-approved and manual underwriting VA LOANS.
QUICK USEFUL LINK: VA DTI Manual Underwriting Guidelines
VA DTI Guidelines on VA LOANS
VA DTI guidelines on VA LOANS for borrowers with 580 credit scores and higher, the maximum front-end debt to income ratio is 46.9% front-end and 56.9% back-end. VA guidelines on debt-to-income ratio requirements mandate a maximum debt-to-income ratio of 31% front-end and 43% back-end for borrowers with under 580 FICO and down to 500 credit scores. on VA LOANS. Use the VA DTI Mortgage Calculator powered by Gustan Cho Associates to calculate your debt-to-income ratio.
QUICK USEFUL LINK: How To Get Refer/Eligible To an Approve/Eligible Per AUS
VA DTI Guidelines on Manual Underwriting
Borrowers can use the VA DTI Mortgage Calculator to calculate your front-end and back-end debt-to-income ratio for VA manual underwriting. VA and VA loans are the only two loan programs that allow manual underwriting. The maximum debt-to-income ratio on VA manual underwriting is as follows:
- 31% front-end and 43% back-end with zero compensating factor
- 37% front-end and 47% back-end with one compensating factor
- 40% front-end and 50% back-end with two compensating factors
USEFUL LINK: VA-Approved List of Compensating Factors
Down Payment Requirements on VA LOANS
VA guidelines on VA LOANS require a 580 credit score to qualify for a 3.5% down payment VA loan. Borrowers with under a 580 FICO and down to a 500 credit score require a 10% down payment. The lowest credit score allowed to qualify for VA LOANS is 500 FICO. For borrowers with under 580 credit scores and down to 500 FICO, a 10% down payment is required. For borrowers who got an approve/eligible per automated underwriting system (AUS) findings with at least a 580 credit score, the maximum debt-to-income ratio cap is 46.9% front-end and 56.9% back-end. For borrowers with under 580 credit scores, the maximum debt-to-income ratio cap is 31% front-end and 43% back-end on VA LOANS.
USEFUL LINK: VA LOANS With High DTI
Using The VA DTI Mortgage Calculator To Calculate If You Qualify
The VA DTI Mortgage Calculator at Gustan Cho Associates has been custom designed to get the most accurate front-end and back-end DTI used by mortgage underwriters. There is no other DTI mortgage calculator in the nation that compares to the debt-to-income ratio mortgage calculator powered by GCA Mortgage. In the next paragraph, we will cover the minimum agency mortgage guidelines on debt to income ratio caps.
Do All Lenders Have The Same DTI Requirements on VA LOANS?
Government and conventional loans have a set maximum DTI cap on their mortgage loan program. Mortgage lenders usually have lower debt-to-income ratio requirements than the agency DTI requirements. The lower the debt-to-income ratio, the better. Low DTI means the borrower has low monthly debts compared to his income. The VA DTI Mortgage Calculator will get you the most accurate estimated housing payment including the VA MIP, PMI, Taxes, Insurance, and HOA if applicable.
- USEFUL LINK: Mortgage Denial Due To Overlays
Can I Get a VA Loan Approval After Mortgage Denial Due to DTI Overlays?
Most first-time homebuyers believe all mortgage lenders have the same lending requirements on VA loans since they are government-backed loans. This is not true. All lenders must make sure their borrowers meet the minimum agency guidelines of VA. However, lenders can have higher requirements on VA LOANS. In the next paragraph, we will cover and discuss a case scenario on VA lenders with overlays on debt-to-income ratios.
What Is An Acceptable DTI For VA Loan Approval?
Let’s go over a case scenario on what an acceptable debt-to-income ratio for a mortgage approval for lenders is. Let’s say Borrower A is a borrower who got an approve/eligible per AUS on a VA loan with a 550 credit score and 43% DTI. Borrower A went to LENDER X where he got denied a VA loan due to not having a 620 credit score. Gustan Cho Associates has no lender overlays and can qualify and approve Borrower A for a VA loan. Use the VA DTI Mortgage Calculator to find out what your DTI is.
- USEFUL LINK: VA Lender Overlays
What Is The Agency Guidelines on Debt-To-Income Ratio on VA LOANS?
Gustan Cho Associates has no lender overlays on VA loans. What this means is as long as the borrower meets the minimum VA guidelines and gets an automated approval per AUS, the borrower is solid. We only go off the automated findings of the automated underwriting system and have zero lender overlays on VA loans. Use the VA DTI Mortgage Calculator to see if you meet the VA DTI guidelines. Use the VA DTI Mortgage Calculator to see if you meet the VA DTI guidelines.
VA Guidelines on Manual Underwriting on VA LOANS
If the borrower does not get an AUS approval and gets a refer/eligible per AUS, Gustan Cho Associates will see if the borrower qualifies for VA manual underwriting guidelines. We will discuss the basic VA DTI guidelines on VA AUS Approvals versus Manual Underwriting. The Department of Veterans Administration (VA), the federal agency that administers VA agency guidelines and the VA loan program, which has no maximum VA maximum debt to income ratio cap. However, most lenders will require a debt-to-income ratio not to exceed 41% to 45%. Why does this happen? Why will a lender not qualify?
- USEFUL LINK: VA and VA DTI Manual Underwriting Guidelines
How Collection Accounts Affect Debt-To-Income Ratio on VA Loans
VA guidelines on collection accounts require lenders to take 5% of unpaid outstanding collection accounts and use it as a hypothetical debt to calculate the debt-to-income ratio. Borrowers can qualify for a VA loan without needing to pay outstanding collection and charged-off accounts.
VA requires mortgage underwriters to use 5% of the unpaid collection account balance to be used as a hypothetical debt. The 5% rule only applies to non-medical outstanding collection accounts with outstanding balances greater than $2,000. Non-medical and medical charged-off accounts are exempt from the 5% hypothetical debt calculation rule. Use the VA front-end and back-end mortgage calculator to calculate your debt-to-income ratio if you qualify for a VA loan with outstanding collection accounts.
The Best Mortgage Lenders With No VA DTI Overlays
Again, if you meet the minimum agency guidelines of VA, VA, USDA, Fannie Mae, and Freddie Mac and get an approve/eligible per automated underwriting system (AUS), you are eligible and qualified. A lender with no lender overlays that just go off agency guidelines will have no problem getting you approved and closed. However, lenders can have higher lending guidelines and you may not qualify with a particular lender. Gustan Cho Associates has no lender overlays on government and conventional loans. We will cover and discuss lender overlays in the following paragraph. Find out in seconds if you meet the VA DTI guidelines using the VA DTI Mortgage Calculator.
DTI Lender Overlays on VA LOANS?
The VA DTI Mortgage Calculator powered by Gustan Cho Associates is a powerful tool for borrowers. Debt-to-income ratio is one of the most important factors for borrowers to understand prior to applying for a mortgage. The debt-to-income ratio mortgage calculator allows you to calculate how much your monthly debt payments are, including your proposed new mortgage payment, divided by your monthly gross income.
The Best VA DTI Mortgage Calculator
Created and launched by Gustan Cho Associates, after months of research and development, the VA DTI Mortgage Calculator along with the Best Mortgage Calculator powered by Alex Carlucci, are hands down the two best calculators for everyone to use and navigate to get accurate numbers. The Best Mortgage Calculator and the Debt-to-Income Ratio Mortgage Calculator are the two most powerful mortgage tools for homebuyers and loan officers during a mortgage transaction. The Best Mortgage Calculator and the VA DTI Mortgage Calculator are the nation’s most accurate user-friendly mortgage calculators used by loan officers, and mortgage borrowers.