VA Residual Income Requirements And Guidelines

This BLOG On VA Residual Income Requirements And Guidelines Was PUBLISHED On March 29th, 2019

VA Home Loans is the best loan program for owner occupant home buyers. However, not all borrowers can qualify for VA Loans. VA Mortgages are for eligible active-duty, retired, and/or surviving spouses. In order for borrowers to qualify for VA Loans, they need a valid Certificate of Eligibility by the VA. Our loan officers can help with the paperwork in obtaining the COE. 

• The main benefits for VA Loans is 100% financing
• No down payment
• No closing costs with sellers concessions and/or lender credit
• Lower mortgage rates than conventional loans
• No annual mortgage insurance premium
• No minimum credit score requirements
• No maximum debt to income ratio requirements
• Upfront VA funding fee can be rolled into the VA Loan Balance
• Maximum loan limit is $484,350 unless the property is in a high-cost area
• Any purchases over $484,350, buyers need to put 25% on the overage of the $484.350
• Very lenient credit guidelines
• Borrowers can qualify for VA Loans 2 years after bankruptcy, foreclosure, deed in lieu of foreclosure, short sale

Borrowers passing the VA residual income test can exceed DTI over 60%. In this blog, we will discuss the important of the VA residual income test for borrowers with high debt to income ratio.

Qualifying For VA Loans With High DTI

The Department of Veterans Affairs (The VA) has no maximum debt to income ratio requirements.

• However, most lenders have additional mortgage guidelines on VA Loans called lender overlays
• Overlays are additional mortgage lending requirements implemented by individual lenders that is above and beyond of the VA
• This is the reason why most lenders will require minimum DTI requirements such as 41% to 50%
• Gustan Cho Associates at Loan Cabin Inc. are direct lenders with no overlays on VA Loans
• We have approved and closed countless borrowers with credit scores in the 500’s and debt to income ratios higher than 60%
• However, an approve/eligible per automated underwriting system is required and borrowers need to meet the VA residual income test

VA residual income test is very important because it determines the residual income borrowers have after paying all of their minimum monthly bills including the proposed mortgage payment. 

What Is Residual Income Mean?

Many folks get VA residual income confused with debt to income ratios. VA residual income is the leftover money consumers have after paying all of the monthly minimum payments including the proposed housing payments. VA residual income test needs to be met by borrowers. The minimum residual income depends on the number of family members in a household. Here is the Residual Income Chart:

Borrowers with higher than $80,000 household income, the following chart explains the VA Residual Income Requirements:

Borrowers who need to qualify for VA Loans with a direct lender with no overlays, please contact us at Gustan Cho Associates at Loan Cabin Inc. at 262-716-8151 or text us for faster response. Or email us at gcho@loancabin.com. We are available 7 days a week, evenings, weekends, and holidays. Gustan Cho Associates Mortgage Group has zero overlays. As long as borrowers get an approve/eligible per automated underwriting system (AUS), we are ready to approve and close the loan. We do not just close your VA Loans but rest assured that we will close it on time.