In the late 80's, as we became more and more automated, the VA established qualifying ratios and set them at 41%. Prior to that time we approved a VA loan using the Residual income method. Basically this required the LO to calculate the Service Members tax burden and then net out his pay. From the net pay we would subtract his PITI, maintenance fees, and any debt that he had to include alimony or child support and then see how much he had left. The VA publishes this table of required residual income:
Table of Residual Incomes by Region For loan amounts of $80,000 and above |
Family Size | Northeast | Midwest | South | West |
1 | $450 | $441 | $441 | $491 |
2 | $755 | $738 | $738 | $823 |
3 | $909 | $889 | $889 | $990 |
4 | $1,025 | $1,003 | $1,003 | $1,117 |
5 | $1062 | $1,039 | $1,039 | $1,158 |
over 5 | Add $80 for each additional member up to a family of 7. |
Key to Geographic Regions Used in the Preceding Tables |
Northeast | Connecticut Maine Massachusetts | New Hampshire New Jersey New York | Pennsylvania Rhode Island Vermont |
Midwest | Illinois Indiana Iowa Kansas | Michigan Minnesota Missouri Nebraska | North Dakota Ohio South Dakota Wisconsin |
South | Alabama Arkansas Delaware District of Columbia Florida Georgia | Kentucky Louisiana Maryland Mississippi North Carolina Oklahoma | Puerto Rico South Carolina Tennessee Texas Virginia West Virginia |
West | Alaska Arizona California Colorado | Hawaii Idaho Montana Nevada | New Mexico Oregon Utah Washington Wyoming |
In the West if the SM has a family of four he needs a residual income of $1,117. The VA also states that if the residual income is 120% of the required or $1,340 in this case than the loan may be approved without regard to the ratio no matter how high it is. In Hawaii this is significant as the SM allowances are so high. An Army Major with a wife and 2 children receives a housing allowance of $3124 per month and that is a non taxed benefit!
;)
Links;)
Tags (Tag Cloud);)
Archives
I love VA loans. I know only one way to write a contract when the buyer is using a VA loan.
No money down and all closing paid by the seller.
We go to settlement and my VA buyer is reimbursed the POC of appraisal, credit report and home inspection fee.
Best loan in the country.