There is no exact ratio requirement when it comes to qualifying for a VA loan. The debt-to-income ratio is simply another factor used to determine the score when reviewed with all other factors. VA lenders can use income from a variety of sources, but each must meet a minimum set of requirements. The first requirement is that income must be verified as full-time and in the world of VA lenders, full-time means working at least 30 hours per week for your employer.
To calculate how much housing you can afford with a VA loan, VA lenders will assess your debt-to-income ratio (DTI). The DTI ratio reflects the relationship between your gross monthly income and your main monthly debts. Our calculator uses the information you provide about your income and expenses to assess your DTI ratio. The debt-to-income ratio determines if you qualify for VA loans.
The acceptable debt-to-income ratio for a VA loan is 41%. In general, the debt-to-income ratio refers to the percentage of your monthly gross income that goes to debt. In fact, it's the ratio of your monthly debt obligations to gross monthly income. The VA prefers a debt-to-income ratio, or DTI, of no more than 41%.
But borrowers with higher DTI ratios can be approved if they have sufficient residual income, another factor lenders consider when reviewing mortgage applications. Residual income is the money left to cover basic living expenses, such as food and clothing, after paying debts, housing, and other obligations. Other government-guaranteed mortgage programs may set a maximum amount of income to qualify for specific loan programs, but the VA does not have that requirement. But things get tight when it comes to the residual income you need if you want to meet VA loan requirements.
According to the VA Loan Manual, these types of income can generally be counted towards qualifying income. Residual Income is a VA loan guide that looks at your remaining gross monthly income after repaying major monthly debts, including repaying the new mortgage. In addition to the DTI, a concept unique to VA loans and some FHA loans is the idea of the residual income rating. The VA minimum residual income is considered a guide and should not trigger the approval or rejection of a VA loan on its own.
