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!
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.
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