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How To Qualify For A VA Home Loan

VA Home Loans have very specific VA guidelines that are used to determine if a Veteran and/or or the surviving spouse of a deceased Veteran can reasonably be expected to be able to repay the VA home loan that the VA is guaranteeing.  Your credit score is not one of the guidelines.

Qualifying For Your VA Loan Can Get You The Home of Your Dreams

Qualifying For Your VA Loan Can Get You The Home of Your Dreams

They figure out whether you can qualify for a VA home loan by developing a ratio between your monthly expenses and your income.

The process of figuring out your qualification ratio is pretty straight forward.   Basically they will add up your monthly debt-related expenses and divide it by your gross monthly income (it will include the income of your spouse if appropriate).  That produces a number that will be multiplied by 100 to get a percentage.  That percentage is what is called your “Qualification Ratio.”

How To Figure Out Your Qualification Ratio

It is a 3-step process.

Here it is:

  1. Add up all your monthly bills that are debts (not utilities) like your car payment or your credit card payments.  If a bill is paid periodically but not monthly, i.e. in month multiples, you will need to pro-rate the bill to a monthly amount by dividing it by the number of months that the bill covers and add the result to the monthly bill total.  If you pay a bill more than once a month multiply the amount of each payment by the number of times that you will pay the bill in a year and then divide the result by 12 and add the answer to the monthly bill total.  DO NOT include your current housing related cost like rent and utilities that you pay for through your landlord.
  2. Add up all your expected monthly mortgage payment-related expenses like principle, interest, homeowners association dues, monthly escrow payments for taxes, insurance, etc. and add the total amount to the monthly bill total.
  3. Then, divide that monthly bill total (which now includes your expected house payment related expenses after you get the mortgage but excludes what you are now paying for housing) by your gross monthly income (including your spouses income, if there is any).  Your gross monthly income is the amount that you get each month BEFORE they take out any deductions.  Multiply the result by 100.  This number is now your Qualification Ratio.

Who Is Qualified And What You Can Do If You Are Not Qualified

If your Qualification Ratio is less than or equal to “41” you will be considered financially qualified.  You will also need to be “Service Qualified.”  Contact the VA to determine if you military service falls into the group eligible for a VA home loan.

If your Qualification Ratio is above “41” there are two things that you can do:

  1. Pay off enough of your recurring debt so that your ratio is below the limit.  Or,
  2. Contact the Veterans Administration and find out if you fall under any of their special programs or guidelines as an exception to the standard rules.

Remember that participating in the VA Home Loans program, if your service qualifies for the program, is your right.  You served your country (you actually risked your life for your country, regardless of what your job in the military was, because any member of the Armed Forces of the United States of America may be ordered into harms way at any time!) and earned the right to your VA benefits… One of which is a VA home loan if you can qualify for a VA home loan financially.