Could Your Income Affect Your Eligibility for a VA Loan?

Updated August 7th, 2021

As a veteran, you may have questions regarding how to sign up for a VA loan and purchase your home. One of the more prominent queries comes from information about your income. Here is what you need to know.

Main Source Of Eligibility Comes From Time Served

If you wish to qualify for a VA loan, then you will need to have served a certain amount of time within the military. For example, you will need to have served at least 90 consecutive days of active service during wartime. Or you will have served 181 days during active service during peacetime. It is also possible to qualify under the national guard or reserves, requiring six years of service. You can also qualify as a spouse whose partner died during service or later on due to a disability gained during service.

Income Threshold And Residual Income

Your income threshold will not be a factor in most VA loan cases. That’s because this type of loan is seen more as a safety net for those who have served within the armed forces, so they have this benefit over others. VA home buyers will not need to reach any specific level of income threshold to get these benefits.

Any veteran looking to use a VA loan will need to have an income of some kind coming in that is stable, regular, and reliable. That’s so that the veteran in question can afford the monthly payments and other expenses related to owning a house, such as utility bills. This is why your VA lender may require you to prove your residual income.

Residual income is the income that is left over each month once your important bills and expenses have been covered. This excess amount will be used to afford costs such as food and transportation, amongst other important things. You can contact a VA loan specialist to get more information, such as Hero Loan. They can explain the importance of VA residual income to you, either via phone consultation or through their website.

Your residual income can be calculated by looking at your monthly income and taking away monthly debts from it. Then you will have your residual income, meaning in order to qualify for a VA-backed loan, you will need to make more money than you spend each month.

Importance Of Debt-To-Income Ratio

Your debt-to-income ratio will also be a factor to consider. It is a similar calculation as your residual income, except instead of your expenses being taken away, you take away any debt payments. That could include credit card debt or any other mortgages you have. To get the ratio, you will divide your debt amount by the income each month.

Credit Score

It is likely that your credit score will not be a deciding factor in your qualifying for a VA loan. The Department of Veteran Affairs does now set any minimum score requirement, but your lender may still have a look, as past credit patterns could have a potential impact.

One Reply to “Could Your Income Affect Your Eligibility for a VA Loan?”

  1. While Veterans Affairs does not have any credit score requirements to obtain a VA Home Loan, many participating mortgage lenders will consider this a primary factor for whether you are eligible for their loan.

Leave a Reply

Your email address will not be published. Required fields are marked *