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VA LOANS; DISABLED VETERAN
I am a Disabled Veteran looking to make a home purchase in California, but unfortunately I have around a 50% DTI with a 675 credit score, and 100% payment history. This has been very problematic with getting a mortgage approved due to my DTI. I am under contract for the home I wish to purchase with 8/27/18 being the close date, and I would like use the VA loan to avoid a down payment. What are my options?
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Some of the factors affecting veteran loans from the VA are income, debt, and credit scores. If you’re a veteran with around 675 credit and a ratio hovering around 50%, here is a guide that should make things easier in the state of California. But be advised: hope is not lost if DTI is still between the given ranges, as a strong set of tools can help.
A 41% DTI can also mean anything else.
A lot of honing in will require you to have a strong compensating factor since the DTI to loan terms ratio will be more lenient—according to VA loans. Nonetheless, having a strong payment history, amongst other things, will still be paramount.
Grow the Income in Residuals
Projected Budget: Residual income is almost always considered for a VA loan over the DTI ratio, as it can help the application get approved.
Additional Sources Of Income: If there are any freelance gigs that you can pull off or even side jobs that can help strengthen your financial profile, doing so is recommended.
Connect with Lenders who understand VA loans.
Look for Lenders: Consider them a boot camp, especially those who are already experienced and well aware of the process of getting funds through VA loans. This will save a lot of your time and have you connected in a dime.
Consider Paying Off or Reducing Debt
Debt Reduction: To reduce your DTI, start by focusing on existing debts that are most manageable. Paying a few debts will help your overall ratio.
Credit Card Balances: Pay off higher-interest credit cards or other debts to enhance your general standing.
Explore Lender Programs
Lender-Specific Programs: Various lenders have veteran programs with less strict DTI requirements. Ask what might be available to you as a disabled veteran.
Use VA Disability Benefits
Income from Benefits: There is support from VA disability compensation, which can be helpful in the income section of your future mortgage application. Don’t forget to point that out to your lender.
Seek Assistance and Advice
Veterans Service Organizations (VSOs): Contact dependents or humanitarian groups like the American Legion or VFW for assistance. They can provide resources or connect you with expert professionals familiar with VA loans.
Consult a Financial Advisor: A financial advisor who knows VA loans can be vital in evaluating your condition and drafting working plans.
Ensure That The Required Documents Are Drafted And Prepared
The Last Touch Of Preparation: If any VA benefits are included, an income verification document or anything else necessary with the application must be included. This will hopefully help speed up the process.
A ratio of fifty might be challenging. Still, it should not deter you from going for a VA loan for a home in California. The help of a reputable lender and the intent to pay off debts while showing your best qualities as a borrower can increase the chances of approval. Be assertive and considerate, approach this process patiently, and do not hesitate to contact the veteran directing assistance.