Tampa Clearwater VA Mortgage | Understanding Qualifying Ratios and Income

By
Mortgage and Lending with Your Tampa Bay Mortgage Source

A Tampa VA buyer in Clearwater recently worked with me in getting his VA approval for a home loan purchase in Clearwater, Florida.  When he came to me, he was a bit concerned about qualifying for the VA mortgage because of his debt-to-income ratio.  What this means is his total monthly debt compared to his gross monthly income.

Standard VA guidelines day that a lender can go up to a debt-to-income ratio (DTI) of 43%.  In my Clearwater homebuyers case, he was at 55%.  Oops...

With standard conventional financing, he was approved through the automated underwriting system, so the DTI was not an issue.  However, for this particular home buyer, his VA funding options was the best choice to get him the lowest monthly payment, lowest closing cost and lowest interest rate.  In other words, I HAD to make this work.

Luckily, I found a loop hole!  With VA financing, borrowers are also qualified on their residual income, in addition to their DTI.  This meant, if his residual income  fit within the guidelines, we were okay to move forward with his loan approval.  Now, you may be asking...what the heck is residual income?  Let me explain.  Residual inomce is calculated as follows:

Gross Monthly Income - (less) Federal Income Tax - (less) Social security - (less) PITI -  (less) home maintenance fee (which is $.14 per square foot) - Montly credit debt

This net figure is the borrowers "residual income".

Now, if the DTI is above normal qualifying ratios (43%), then the borrowers residual income must be 120% above the residual income requirement for the region and the number of people in the household.  AND, in my borrowers case, we were golden!

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This VA loan worked out as approved because I found the way to make it work!  If you are considering a VA loan in Tampa Bay, Clearwater, or St. Petersburg and would like to discuss your options with a Professional VA Lender, please call or email me for a complimentary consultation.

Information provided by your Tampa Mortgage Professional, Leah Ross.  Proudly serving South Tampa, North Tampa, Westchase, Brandon, Clearwater, St. Petersburg and the remaining Tampa Bay area.

View more mortgage posts on my Tampa Bay Mortgage Blog.

Comments (16)

Joanne Hanson
Coldwell Banker Colorado Rockies Real Estate - Frisco, CO
Summit County, Colorado Realtor
Leah, I think in almost 15 years in this business I have had one buyer do a VA loan.  In our area the prices are too high for them.  I am glad you were able to get this guy his house, and at a good rate!
Sep 10, 2007 04:27 PM
Missy Caulk
Missy Caulk TEAM - Ann Arbor, MI
Savvy Realtor - Ann Arbor Real Estate
Leigh, I was reading along and the thought kept going through my mind. What is residual income ? Then you answered it. Good job, finding a way to make it work in his best interest. I would definately work with you, if I was buying in the Florida area.
Sep 10, 2007 10:42 PM
Matthew J Blum - (retired from the business)
Palm Beach Gardens, FL
Leah, Great Post. You have to love it when it all comes together
Sep 10, 2007 11:11 PM
Chris Griffith
Downing-Frye Realty, Bonita Springs, FL - Bonita Springs, FL
Bonita Springs Listing Agent
This may be a silly question, but how many VA loans do you do in a year?  Since we're not near a base I almost never see them.
Sep 10, 2007 11:16 PM
Michael Delp
Mortgage Pro - Telford, PA
I have only done a couple of VA loans myself. This is good information, especially when we get our troops back home. There may be a need for more VA loans.
Sep 11, 2007 01:18 AM
Mana Tulberg
805 County Real Estate - Camarillo, CA
Real Estate Agent - Camarillo CA
Leah, Thank you for the great lesson. I have only come a cross a VA loan once, They are not worth it over where I am.
Sep 11, 2007 03:26 AM
Thomas Weiss
Thomas R. Weiss - West Palm Beach, FL

Leah,

Thats a whole lot on good info there...

Nice Job!!

Tom Weiss

Sep 11, 2007 05:33 AM
Neal Bloom
Brokered by eXp Realty LLC - Weston, FL
Realtor CRS-Weston FL Real Estate

Leah,

Only Two of my listings had buyers with VA loans about 4 yrs ago...sonce then we have not seen them. But I know the levels went up.

Sep 11, 2007 12:44 PM
Rita Taylor
None - Sanford, NC
Sanford NC Real Estate - Homes for Sale in Sanford North Carolina

Leah,

It is nice to see a lender that looks at all the options available to find the best one for their client.  Even better, you seem to understand all the ins and outs to make it work for your clients in Florida. 

Sep 11, 2007 02:12 PM
Leah Ross
Your Tampa Bay Mortgage Source - Tampa, FL
Tampa, Florida Mortgage

Joanne ~ Yes, this one worked out well.  We have a similar problem here in Florida, but first time buyers are a great group to take advantage of the VA programs.  When I used to originate loans in Michigan, we used them much more frequently!

Missy ~ Hopefully I explained it easy enough!  Thanks for the comment!

Matt ~ You are so right.  A perfect plan works out so well!

 

Sep 12, 2007 11:30 PM
Leah Ross
Your Tampa Bay Mortgage Source - Tampa, FL
Tampa, Florida Mortgage

Chris ~ Actually it's a great question.  I just did two in the last month, they are going to become more popular with the subprime loans going out.  As I told Joanne, I used to do a lot more in Michigan, about 15-20 per year.  I would expect to do about 10-15 within the next 12 months.  Hopefully more if Active Rain helps with my VA google juice!

Michael ~ This is a great point...we will be having more men and women who are going to be eligible and coming home to a new home they own is a wonderful rewared for them!

Neal ~ If the loan amount works, I believe we will be seeing more of them!

Rita ~ Thank you for the comment.  My mind works at a million miles per hour.  It seems I have a lot of info up there, it's just  matter of getting it all straight to explain it to the public!

Sep 12, 2007 11:34 PM
Nick M.
Certified Residential Appraiser- West Palm Beach Real Estate - West Palm Beach, FL
Realtor-Appraiser in West Palm-South Florida Real Estate Appraiser
Good for you, Leah,  and even better for your client. Always pays to aheva smart cookie for a mortgage broker. congrats!
Sep 13, 2007 01:28 PM
Cyndee Haydon
Charles Rutenberg Realty - Clearwater, FL
727-710-8035 Clearwater, Beach Short Sales Luxury Condos &Homes
Leah - Another great article and we've seen the great job you do helping Tampa and Clearwater area  Veterans to get a mortgage and purchase a home. Thanks for always being our local home loan expert. 
Sep 17, 2007 02:20 AM
Susie Roscoe
Signature Realty Associates - Brandon, FL
Real Estate Specialist | Brandon, FL
Leah - with MacDill AFB right around the corner, you're certainly a hit with VA loans!!  Thanks for keeping us all in the loop!!
Sep 17, 2007 09:34 AM
Scott Blanchard
Mortgage Force - Newtown, CT

Great post Leah, very informative !

Nov 27, 2007 06:41 AM
Joe Kendall Broker
Keller Williams Elite Realty - Fort Myers, FL
It's Always best to talk to "Broker Joe"
Great post, great information Veterans take notice!  Now is your time to buy!
Mar 03, 2008 04:20 AM