Gross Up Questiosn for VA Disability

[Anonymous]

Hi - I've read some posts about how lenders can gross up non-taxable income such as SSDI, VA disability, etc. Does anyone know if lenders are required to do this (for VA or FHA loans)? Do they do this automatically or is it something that needs to be requested? I've seen many posts stating "up to 25%", how is the percentage determined? Is there a standard table lenders must use? I'm planning my future mortgage and I'd like to be able to use my VA disability in my DTI calculations with a gross up amount vice actual amount (so knowing if I can and the percentage I can use would be very helpful). Many thanks!!!

[Mortgage-Specialist]

Non-taxable income should be grossed up 25% for VA loans and 15% for FHA loans. I'd like to assume that all lenders follow this. This isnt something you'd need to request but unfortunately you might need to remind the loan officer. The biggest named lenders (with all the commercials) hire loan officers (kids who are fresh out of college.) These lenders have them VERY well trained in sales but unfortunately that's about it.

[VALoanMaster]

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@Anonymous wrote:
Hi - I've read some posts about how lenders can gross up non-taxable income such as SSDI, VA disability, etc. Does anyone know if lenders are required to do this (for VA or FHA loans)? Do they do this automatically or is it something that needs to be requested? I've seen many posts stating "up to 25%", how is the percentage determined? Is there a standard table lenders must use? I'm planning my future mortgage and I'd like to be able to use my VA disability in my DTI calculations with a gross up amount vice actual amount (so knowing if I can and the percentage I can use would be very helpful). Many thanks!!!

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Hi ArsenalGunner,

Unfortunately it is not a requirement to gross up non-taxable income on VA or FHA loans so it's up to the loan officer.

VA is 25% while FHA can be 15% or 25% depending on what tax bracket you're in.

You have to be careful with grossing up income on VA loans because that does not transfer to the residual income calculations so you want to make sure the residual is correct.