Reader Question: Do I Qualify for a VA Loan?

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I received this question on a comment and thought I’d share my response via a post.

Happy New Year,
I am contemplating a return to the Tri Cities and would like to utilize my VA 0 down loan in the amount of $250,000 or less. My income is based of a civil service pension, social security and VA disability.  The total gross amount I currently receive is $4,400 monthly.   Am i going to be able to qualify for the VA  (or any other)loan?

Thanks in advance,
Greg

VA’s standard guidelines allow for a debt to income ratio of 41%.  This means that Greg’s total monthly mortgage payment and monthly debts should not exceed 41%. 

41% of $4400 is $1804. VA guidelines would probably allow $1804 for total proposed mortgage payment and monthly debts.

The current mortgage payment for a $250,000 zero down VA purchase would be roughly $1422 (including taxes estimated at $260.50 and insurance at $50 per month).  

This is based on rates as of 3:00 pm on January 3, 2012 of 3.250% (apr 3.430) for a 30 year fixed VA loan based on credit scores of 720 or higher. 

The proposed mortgage payment of $1422 less the $1804 allowed monthly debt (for the 41% debt to income ratio) leaves around $382 per month for other possible monthly debts (car loans, student loans,  credit cards, child support, etc.).

So if Greg has less than $382 per month in other debts, he would qualify for a $250,000 home (also assuming taxes and insurance are around what I’ve estimated).

BUT WAIT… there’s more…

If Greg’s social security income may be able to be grossed up by 15%, which would allow him to have a little more “wiggle room” with the amount of monthly debt.

In addition, if he is a disabled veteran, he may qualify to be exempt from the VA funding fee which would  also reduce his payment by about $23.00 (apr 3.261).  This would allow for $400 in monthly debt (not including if the social security income is able to be grossed up) with Greg qualifying for a $250,000 home in the Tri Cities.

If you are interested in applying for a VA, FHA or conventional loan for a home anywhere in Washington state, please click here.

Comments

  1. Rhonda,
    Hello and you have some great info on the website…this said my turn to ask a question about VA loans. Background; I am an active duty Navy officer being transferred to San Diego for my final tour. My wife and I decided we wanted to purchase our retirement (at 24 years in 2015) home in the greater Seattle area as we are both from Washington (my Home of Record) her family lives there, her parents are in the mid-80′s and their health isn’t good, and lastly I am being transferred to a command that is well known for its long hours. Also factoring in the current low interest rates, our 780+ credit ratings (all three) and relatively reduced prices before the market starts heading up again we’d like to buy a home using my VA eligiblity now than in 2 or so years. My potential leader has said since this is not my ‘primary residence’ I may not be eligible for a VA loan. As I see it this will be my wife’s residence, she will be on the loan/mortgage, there are firm links to Seattle and my intention to retire to there in 2 years so even though I will not be there initially she will be while I move into a cheap apt or spare room in San Diego. Question; Based on the little info provided, and I realize this is spectulation, would the odd be better than average than an underwriter allow the loan?

    • Hi Rob,
      If your wife is moving in to the Seattle purchased property within 60 days of closing, then this meets the occupancy requirements for VA.

      If she is not moving into the Seattle property within 60 days of closing, it is not eligible for a VA purchase loan.

      You would have to purchase the property as a 2nd home or an investment property, on a conventional loan.

      • She would move into the property as soon as possible following the sale, definitely within 60 days of closing. Thank you! Oh, I reread my initial comments…sorry for the very poor grammar, was a tad frustrated with my lender when they called to say ‘you cannot have a VA loan’ due to the ‘residency requirement’. But it was for the best as I found your website looking for answers on VA eligiblity. I checked out the VA website looking for answers, but even using the search features it’s difficult to find answers you need. Again thank you.

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