12-10-2012 07:37 PM
We are pre-approved for a VA loan and are waiting to hear backabout an offer we put in today. I'm on pins and needles waiting!! Anyhow, we are only able to use my husband's income as I am self employed and have been for less that two years. Without my income, our dti is on the high side at about 46% with our new proposed mortgage. I am living in fear that our residual income isn't adequate! WITh our family size and the region we live in, our residual incomedeeds to be 1062. I believe we are okay there, but will someone calculate it for me because I'm so afraid I am doing it wrong. Lol.
Monthly income: 6200
Reoccuring debt: $1378 (small school loan, small credit card balance, and my husband's child support)
Proposed mortgage: $1500
I divided the $6200 by .80 (on the high side but I wanted to be safe), and got $4960. Subtract the $1378 for the reoccurring debt, that's $3582. Lastly, subtracting the proposed mortgage of $1500, I have $2082. Is that all there is to the residual income guidelines? If so, we are definitely more than okay.
Thank you! In all my years of lurking, I have learned a TON here!
12-10-2012 09:15 PM - edited 12-10-2012 09:17 PM
Residual Income Can Overcome High "Back-End" Ratio
Like other mortgage program, VA loans consider an applicant's "backend ratio"; the VA's maximum allowable debt-to-income ratio is 41 percent. However, veterans whose DTI exceeds 41% are not necessarily denied for a VA loan. The VA allows for an exception.
If you are a VA applicant and your DTI exceeds 41 percent, so long as your residual income is 120% of the stated guideline, your DTI will be ignored. For a real-life example, a VA borrower in Ohio with a family of 4 whose DTI exceeds 41% would need to show residual income of $1,203 to satisfy the VA and its underwriters.
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