VA Maximum DTI Guidelines On VA Home Mortgages


This BLOG On VA Maximum DTI Guidelines On VA Home Mortgages Was PUBLISHED On June 1st, 2019

All government and conventional loan programs have minimum credit score requirements and debt to income ratio requirements with the exception of VA Mortgages.

  • The Department of Veterans Affairs (The VA) created and launched VA Loans to reward the men and women of the United States Armed Services who have served our country
  • The VA realizes that service members often have lower credit profiles than their civilian counterparts
  • This holds true especially when they are deployed overseas
  • Members of the Armed Services also need to sacrifice being stable in one location
  • They often get transferred to another city and/or state every few years
  • Due to the sacrifices men and women of the Military make in serving our country, the VA offers VA Loan to eligible active duty and/or retired members of the U.S. Armed Forces
  • Eligible spouses of deceased eligible veterans may also qualify for VA Loans
  • The Veterans Administration has no VA Maximum DTI Requirements with an approve/eligible per automated underwriting system (AUS)

In this blog, we will discuss VA Maximum DTI Guidelines and qualifying for VA Loans with high debt to income ratios.

VA Eligibility Requirements

Below are the minimum VA Eligibility Requirements on VA Home Loans:

  • No down payment required with 100% financing
  • Up to 4% in sellers concessions by home sellers allowed for home buyer’s closing costs
  • If a borrower is short in covering closing costs with sellers concessions, the lender can offer a lender credit for the shortage in lieu of a higher mortgage interest rate
  • There are no minimum credit score requirements on VA Loans with an approve/eligible per AUS
  • Per VA Maximum DTI Guidelines, the VA does not have a maximum debt to income ratio requirement on VA Loans with an approve/eligible per AUS
  • There is a two year waiting period after Chapter 7 Bankruptcy, foreclosure, deed in lieu of foreclosure, short sale to qualify for VA Loans
  • Borrowers in Chapter 13 Bankruptcy Repayment Plan can qualify for VA Loans via manual underwriting with Trustee Approval after making 12 monthly payments
  • Chapter 13 Bankruptcy does not have to be discharged as long as they are making timely scheduled payments to the Bankruptcy Trustee
  • There is no waiting period after Chapter 13 Bankruptcy discharge date to qualify for VA Mortgages
  • Any Chapter 13 Bankruptcy that has not been seasoned for 24 months after the discharge needs to be manually underwritten
  • VA Manual Underwriting Guidelines Apply

VA Maximum DTI Guidelines On Manual Underwriting Versus AUS Approval

As mentioned earlier, the Department of Veterans Affairs (The VA) has no maximum debt to income ratio requirements on automated underwriting system approvals.

  • The VA also has no minimum credit score requirements
  • Gustan Cho Associates at Loan Cabin Inc. are direct lenders with no lender overlays on VA Loans
  • We recently closed a VA Loans with a 583 FICO credit score and 60% DTI
  • Gustan Cho Associates have closed VA Loans with over 60% DTI
  • Residual Income is key in getting an approve/eligible per AUS for borrowers with higher DTI
  • However, VA Maximum DTI Guidelines on manual underwriting is normally capped to 50% DTI
  • Mortgage Underwriters have a lot of underwriter discretion on manual underwriting
  • Gustan Cho Associates can probably go as high as 54% DTI on manual underwriting with compensating factors
  • Compensating Factors are very important in manual underwriting

If you have any questions on this blog and/or other mortgage-topics, please contact us at Gustan Cho Associates at 262-716-8151 or text us for faster response. Or email us at Gustan Cho Associates Mortgage Group is available 7 days a week, evenings, weekends, and holidays.

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