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Discussions tagged with 'How Do You Pass Residual Income on VA Loans'
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VA loans are hands down the best mortgage loan program. However, it is only available for active duty, retired veterans, or spouses of eligible deceased veterans. To qualify and be eligible for VA loans, veterans need to have earned their Certificate of Eligibility COE. VA loans do not have a maximum loan amount, do not have a maximum debt-to-income ratio cap for borrowers with sufficient residual income, do not have a minimum credit score requirement, and there is no mortgage insurance required. Eligible borrowers can get approved for VA loans with credit scores down to 500 FICO and a debt-to-income ratio exceeding 60% DTI with high residual income and compensating factors. Attached is a fresh guide about What is Residual Income and Why is it Important on VA Loans. It will give you a comprehensive overview of VA loans and the latest update on VA Residual Income Guidelines.
Below, we will cover Frequently Asked Questions about VA residual income.
Frequently Asked Questions about VA Residual Income:
Is VA Disability Income Considered in Residual Income?
VA disability compensation counts as eligible net income if you can show it will continue. Because it is usually not taxable, it can help your debt-to-income ratio. The actual payment amount is included in the residual income calculation.
Is it Possible to Use BAH and BAS to Apply for a VA loan?
If you can show that certain military pay allowances will continue, they can be counted. The lender will consider the type of allowance, your duty status, and whether the payments are likely to continue.
Does Childcare Count Against VA Residual Income?
When household circumstances necessitate it, if your household needs childcare, you should document and include those expenses. Since childcare costs might not show up on your credit report, make sure to mention them.
Can a Non-Borrowing Spouse Be Excluded From Household Size?
It’s possible. A non-borrowing spouse can be excluded if the lender confirms the spouse has steady, reliable work sufficient to support them. The decision must follow VA and fair-lending rules.
Do Utilities Count in VA Residual Income?
Yes. Maintenance and utility costs are included in your estimated monthly shelter expenses. The lender will make a reasonable estimate based on your specific property, not just a general number.
Can Cash Reserves Make Up for Low Residual Income?
Having a lot of liquid assets can help as a compensating factor, but cash reserves cannot replace the residual income calculation. If all your documents support approval, the underwriter must explain why they are making the request.
Does Residual Income Apply to a VA IRRRL?
Most of the time, full income-underwriting rules do not apply to a standard Interest Rate Reduction Refinance Loan. Some IRRRLs may need prior approval or credit checks and will be handled like a regular loan.
Can a VA Loan Be Approved With Residual Income Below the Guideline?
https://gustancho.com/va-loans-residual-income/
It’s possible, but only if your debt-to-income ratio is 41% or less and the underwriter’s supervisor gives a well-documented reason. Approval is not guaranteed and must be based on strong compensating factors.
gustancho.com
VA Loans Residual Income Guidelines for Homebuyers
Learn about VA loans residual income guidelines, regional limits, DTI rules, calculation steps, and practical tips to help you qualify for a mortgage.
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