compared to what we would qualify for with a standard loan, would we be more likely to be approved for a higher amount with a va loan. We have excellent credit, but our income in is not all that much. (less than 40,000) Yes my husband is a Veteran. ( he is currently in the military but will be getting out about the time we want to buy a house. )
2007-02-14 04:42:54 · 3 answers · asked by I love sushi 4 in Business & Finance ➔ Renting & Real Estate
You would probably qualify for less. Debt to income ratios are normally allowed to be higher on conventional loans than government loans. The standard max debt to income ratio for VA loans is 41% (although I have seen it exceeded case-by-case, with compensating factors), and the max for conventional loans is 50% (I've seen this figure exceeded regularly). Compensating factors are usually things like better than required credit scores, large cash reserves, long time on the job, etc.
Your debt to income ratio is your total debt divided by your gross income. If you have $2,500 in monthly bills (total, with the new loan) and $5,000 in gross monthly income, then your debt to income ratio is 50%. There is also a housing ratio that is figured by taking the new house payment and dividing it by your gross income, and this figure is usually around 28% on VA loans. It is normally not calculated on conventional loans.
The benefit to a VA loan is 100% financing without the monthly MI payment, although you will pay a hefty funding fee (financed with the new loan). With Congress allowing MI to be tax deductible (at least for 2007), conventional loans are looking better and better, even if MI is required.
(This is a very general explanation, there are other factors involved).
2007-02-14 05:01:20 · answer #1 · answered by Mr. Knowitall 3 · 0⤊ 0⤋
No, I don't think it will make you qualify for more. The bank still has criteria for debt-to-income. The VA can't help you with that.
Also, the bank may have a problem loaning you money after your husband gets out of the service unless he has a secure job waiting for him in the same field. I would suggest that you talk to a mortgage broker now to see what affect this will have on your ability to qualify for a mortgage.
2007-02-14 12:58:19 · answer #2 · answered by Insurance Biz CT 5 · 0⤊ 0⤋
No...The Va loan is the same as a standard loan, the VA is just making sure if you go into foreclosure they are there to clean up your mess...
2007-02-14 14:25:23 · answer #3 · answered by smoothlova1 3 · 0⤊ 0⤋