October 4th, 2017 9:53 AM by Joan Rusco
The number one reason lenders love vets is because they are more likely to make their mortgage payments. The facts speak for themselves. For lenders, VA mortgages are the safest. How can this be since vets can buy a house with no money down? Isn’t no or low-down payments one of the reasons of the housing crash a few years ago?
It makes sense that people with very little skin in the game were more likely to walk away from their mortgage payments and in many cases, that did happen. However, that was not the case with VA mortgages. A main reason why VA mortgages are safer is because of the residual income requirement to get a VA loan.
Residual income is the money you have left after all your monthly bills are paid. Bills such as housing, utilities, insurance, car payments, credit card payments, etc.. Add up all those monthly bills then subtract from your income and that’s your residual income. The VA has certain residual income requirements. They want to know that not only can you afford to make your mortgage payments but you can also afford to keep your household operating. Here are those requirements based on the number of people in the household:
Family Size Residual Income Required
over 5 Add $80 for reach family member up to 7
This raises the VA loan qualification issue of Debt to Income ratio, commonly referred to as your DTI. As you can see from the chart above you must have money left over after you’ve paid your bills. VA lenders usually like to see a DTI of 41%. That is figured by adding up all your debts and then dividing by your income. 41% is not a hard and fast rule but rather a general guideline. We at VALoansMN have qualified vets with much higher DTIs.
As you can see there’s a reason VA loans are good loans for lenders. The VA wants to make sure you can not only make your mortgage payment but are not house poor after your purchase. We at VALoansMN are very good at helping you make that house affordable. No one does Midwest VA lending better. Call us and let us show you how.