Additional Changing Requirements for VA Loan

[Anonymous]

I am so anxious for all this to be over.  The no money down/out of pocket for VA loans is a BIG myth.  My LO originally had me pay 5 credit cards down to $10-20, and 1 to $800, which I did.  Now he wants me to pay them all down to ZERO.  I thought paying down to ZERO would lower my FICO score?  He said we were right up against the DTI.  Current monthly payments are $272 Student Loan, $440 Truck Payment, and $385 for a loan.  The Credit cards are $10-35 a month.  My monthly income is $7,492 from work and my VA Disability is $1,541 a month.  I don't see how we are up against the DTI.

I paid the $1,000 earnest Deposit 

I paid the $510 Inspection Fee

I still need to pay the one year in advance of Homeowners insurance of $1,566

The only thing that will remain is Appraisal and it says to be paid by borrower but I think it is wrapped up in closing costs that the seller will pay.  

Hopefully this will all be over soon.

[JVille]

You will need to pay the appraisal yourself and IF your seller is providing a credit at closing towards buyers closing costs it will be reimbursed at that time.
Paying your CC off won’t likely have much effect because you do have other credit in your profile.

[LakeLife]

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@Anonymous wrote:

I am so anxious for all this to be over.  The no money down/out of pocket for VA loans is a BIG myth.  My LO originally had me pay 5 credit cards down to $10-20, and 1 to $800, which I did.  Now he wants me to pay them all down to ZERO.  I thought paying down to ZERO would lower my FICO score?  He said we were right up against the DTI.  Current monthly payments are $272 Student Loan, $440 Truck Payment, and $385 for a loan.  The Credit cards are $10-35 a month.  My monthly income is $7,492 from work and my VA Disability is $1,541 a month.  I don't see how we are up against the DTI.

I paid the $1,000 earnest Deposit 

I paid the $510 Inspection Fee

I still need to pay the one year in advance of Homeowners insurance of $1,566

The only thing that will remain is Appraisal and it says to be paid by borrower but I think it is wrapped up in closing costs that the seller will pay.  

Hopefully this will all be over soon.

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Not true at all, and it depends on your situation.  I've used my VA loan three times (one a IRRRL refinance) and my ex-wife used her's once.  We paid nothing down each and every time.  If you're DTI is out of whack for a home mortgage that's on you not the VA.  Ernest money will be refunded to you if you so choose.  Would you rather not have an inspection?  I think you can roll that into the loan too though. 

It's a great program and helped me buy my first house along with another after my divorce when money was too tight for a down payment.  Be thankful you have it available to you.  

[Anonymous]

RobertJ, so you did not have to pay for your inspection and insurance up front?

[Anonymous]

Insurance and title costs are closing costs usually, not a down payment. Also, the DTI requirement is a lender thing, not VA. Some lenders do 43% while others go to 55% or higher DTI, again depends on the lender. Best of luck!

[VALoanMaster]

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@Anonymous wrote:

RobertJ, so you did not have to pay for your inspection and insurance up front?

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Hi Vanny66,

It might be time for you to get a 2nd opinion.

Based on the info you provided, here is what I came up with.

If we gross up your VA disability by 125%, your total monthly income would be $9,418.00.

Just to be conservative, let's take 41% of that, VA allows you to go way higher but let's just keep it conservative.

$9,418 X 41% = $3,861.38.

That means we have $3,861.38 to cover all of your debts & the proposed mortgage payment.

So now let's subtract your debts from this number to get an idea of how much you would have left to cover the mortgage.

$3,861.38 - $272 for your student loans, - $440 for your truck payment & - $385 for your loan payment.

That leaves you $2,764.38 for a mortgage!

What is the purchase price of the home & how much are the property taxes?

Here a couple of other observations.

They lender could be stretching the truth. They may not need you pay down your credit cards to drop your ratios, they may be trying to get your credit scores up to get your file approved through an automated underwriting system. If so, there is no reason for the LO to lie about this.

Your home owners insurance will be paid at closing and should be included in your closing costs so that is not an out of pocket expense.

Hopefully you have the seller paying your closing costs & there is enough left over to reimburse you for your appraisal & inspection at closing.

Paying down your credit cards to improve your ratios or your scores doesn't have anything to do with whether or not a VA loan is no money down. You're paying down credit cards that you're going to pay anyway & it benefits you to not carry balances.

Like I said, it maybe time to get a 2nd opinion.

[Anonymous]

VALoanMaster, 

The mortgage payment is only $1807 a month.  It seems they are trying to get the DTI below 36% for some reason.  

[VALoanMaster]

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@Anonymous wrote:

VALoanMaster, 

The mortgage payment is only $1807 a month.  It seems they are trying to get the DTI below 36% for some reason.  

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That doesn't make any sense. There isn't any reason, that I can think of, they would need your back end ratio that low.

Unless your income came in lower? Or if you have any undisclosed debt like child care, child support or alimony?

Are you married? if so is your wife on the loan? Are you in a community property state?

[Anonymous]

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@VALoanMaster wrote:

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@Anonymous wrote:

VALoanMaster, 

The mortgage payment is only $1807 a month.  It seems they are trying to get the DTI below 36% for some reason.  

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That doesn't make any sense. There isn't any reason, that I can think of, they would need your back end ratio that low.

Unless your income came in lower? Or if you have any undisclosed debt like child care, child support or alimony?

Are you married? if so is your wife on the loan? Are you in a community property state?

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Income came in higher because federal employee raise just took effect.  No undisclosed debt, not married, I am female.  Today I received a changed circumstance letter, my interest rate went down and it is locked until May 28, 2019.  The payment went down to $1,783.62

[JVille]

So exactly what is the problem or has it now gone away?