The first requirement is that. 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. Monthly Income — Monthly Debts %3D Residual RevenueTo qualify for a VA home loan, this residual income number must exist.
In a nutshell, you should make more money than you spend each month. Learn about VA home loan eligibility requirements for a direct or VA-backed loan. Find out how to request a Certificate of Eligibility (COE) to show your lender that you qualify based on your service history and service status. Keep in mind that for a VA-backed home loan, you'll also need to meet your lender's credit and income requirements to receive financing.
To be eligible for a VA loan, you or your spouse must meet the minimum service requirements set by the Department of Veterans Affairs (VA), have a valid Certificate of Eligibility (COE), and meet the lender's credit and income requirements. The VA does not establish a minimum credit score requirement for VA loan eligibility, but lenders generally do. Because of this, VA credit score requirements vary by lender, and most lenders generally require a mortgage credit score of 620 to obtain financing. 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. However, even though few VA borrowers have “skin in the game,” VA mortgages fail to pay at the lowest rate of all major loan options, including preferential loans made through Fannie Mae and Freddie Mac To obtain mortgage approval, the Department of Veterans Affairs requires that VA mortgage applicants show a minimum residual VA income based on their geographical location and the size of their household. 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.
According to the VA Loan Manual, these types of income can generally be counted towards qualifying income. This system of using residual income as a qualifier is one of the reasons VA loans have such a low default rate. DTI and residual income give lenders a holistic view of their purchasing power and ability to qualify for a VA loan. One of the key financial metrics for lenders is the debt-to-income ratio (DTI) when it comes to obtaining a mortgage loan from the VA.
