What is the max front/back ratio for a VA Loan? and does price of home matter?

Asked by Brandon, Fallbrook, CA Sun Feb 3, 2013

My front end ratio is only 21% but my back end is over 50% I pay all my bills each month but I carry alot of debt.

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10
Brad Yzermans, Mortgage Broker Or Lender, Murrieta, CA
Sun Feb 3, 2013
Hi Brandon,

Yes, BAH and BAS is counted as qualifying income on VA loans, and it can be grossed up 115% since it's not tax deductible. This will reduce the DTI ratio but when it comes to meeting the residual income, only the base BAH and BAS income is used...not the grossed up amount.

I could tell by looking at your LES if there is any other special pay income that could be used. Do you have any other deductions or allotments?

I too am a Certified Military Housing Specialist, but to be honest, the 1 hour webinar and pseudo test we all took to get that designation does little to nothing to making sure a loan officer or realtor knows how to get a VA loan approved. The non-profit basically taught us about some military specific acronyms, rank, discussed the various branches of services, some history of each branch, and a few other things.

Has a lender run your file through the DU Automated Approval system? Your FICO score will also have an impact on how high of a DTI ratio allowed as well as any reserves or savings listed on the 1003 application.

If your revolving credit cards are close to being maxed out, that could play a factor as well. It concerns underwriters and the automated system when a person is over-utilizing or maxing out their credit lines.


If you would lie to discuss qualifying for your VA loan, give me a call (951) 215-6119.
1 vote
Hello everyone, and thank you for your answers. I ask because I am E-6 paid over 6. In April I go over 8 giving me an additional 200+ dollars in base pay each month. My monthly debts with credit cards and car payment equal about 1650 and my rent is 1149 each month. I went through Navy Federal and they said that it would be over 50% on the back end of the DTI and it wasnt likely that we would be approved. I got my Equifaxscore and it was 683. My Transrisk score was 632. I'm looking for a home around 200k as it would be about the same as my monthly rent.
Flag Sun Feb 3, 2013
George Raymo…, Mortgage Broker Or Lender, Fort Worth, TX
Mon Feb 4, 2013
Some good answers below. I am a Veteran and I am actually qualifying for a home loan myself. There are many factors on a VA loan that are different then any other loan i.e. residual, members of your household etc. These factors can drastically change the dynamics of qualifying for a VA loan. My DTI is in the same neighborhood as yours, but I have compensating factor that allows the back end ratios to exceed the 47% most lenders can go. Please feel free to contact me directly if you have any questions or if I can give you some tips.

Best of Luck!
Web Reference:  http://www.AFN-Loans.com
0 votes
Scott/Shelley…, Agent, San Diego, CA
Mon Feb 4, 2013
Hello Brandon,

THANK YOU FOR YOUR SERVICE TO OUR COUNTRY!

You have been given lots of great advise here! I really liked Greg's answer. You need to find a lender and apply for a loan now. There is no guessing in this business.

You really need to know what you can qualify for, you need to know your full loan payment, taxes and insurance before you start looking at a house.

Then you can shop with confidence for your new home. You could waste an enormous amount of time on the wrong priced home etc...

Is your back end DTI of 50% where you are at now or with a new home loan included?

We are a husband and wife team. Scott and I have worked and lived in the Temecula Valley for over 20 years. We've been in the real estate and lending industry for over 30 years.

We are realtors and lenders. Our company has over 300 agents. Scott and I belong to both San Diego and Temecula/Riverside board of Realtors. So if you were interested in a home in Fallbrook or Temecula Valley we can represent you with full board privileges.

We would be glad to answer all your questions. Who ever you decide to go with make sure they have at least 5 years of full time experience. This business in very very difficult these days. There are so many things that can go wrong. You need experience on your side.

Also...make sure who ever you go with will fully approve your loan now! Not just run your loan thru the desk top underwriter DU or LP. You MUST have your loan fully underwriten by the underwriter that looks at your income and your assets. DU and LP are computer underwriting systems. So you a loan officer can put any information into the system to obtain an approval - it is not verified - There are mistakes made everyday by inexperienced loan officers that don't know how to read taxes or forgot to look for 2106 expenses etc...An underwriter signs off on your income and asset documentation.

This will also help you beat out other offers. Who do you think the seller is going to choose ---the offer with the fully underwritten approval --- or the pre approval from DU or LP??

Good luck to you and congratulations!

Scott and Shelley Weier
Cal State Realty
C2 Financial Corporation
951-587-2100
Shelley@CalStateRealty.us
#0117586 / #01217373
NMLS License # 258707
0 votes
Greg Herman, Mortgage Broker Or Lender, Oakland, CA
Mon Feb 4, 2013
Hi Bradon!
Today professionals in this industry don't guess on whether someone qualifies or not. The stakes are too high and the client (you) doesn't get what they deserve, an accurate answer.
Underwriting is accomplished using DU or LP which we have access to both. These underwriting engines are different and depending on the scenario, we can use what will be most beneficial for you.

Credit Unions and Banks generally have more overlays that keep you from purchasing a home. I suggest having your scenario plugged into the underwriting engine which would require your credit to be run.

Lastly I thank you for your service! We are graced with the ability for ongoing education for a number of loan programs. Any programs that help with the education regarding VA Home Loans is a step towards helping our Veterans. With my 27 yrs of knowledge and experience in the business, it's still great to be able to pick up any additional information from a great organization such as USA Cares (Administrator for the Certified Military Housing Specialist). You may want to go on their website as well as they have outstanding resources for our Veterans.

I can give you a full analysis of your credit scenario and let you know where you will be at now and in April when you rank up.

Greg Herman
951-265-1607
CMHS
NMLS#215455
0 votes
Brandon, Home Buyer, Fallbrook, CA
Sun Feb 3, 2013
Hello everyone, and thank you for your answers. I ask because I am E-6 paid over 6. In April I go over 8 giving me an additional 200+ dollars in base pay each month. My monthly debts with credit cards and car payment equal about 1650 and my rent is 1149 each month. I went through Navy Federal and they said that it would be over 50% on the back end of the DTI and it wasnt likely that we would be approved. I got my Equifaxscore and it was 683. My Transrisk score was 632. I'm looking for a home around 200k as it would be about the same as my monthly rent.
0 votes
I just want to be able to get something for the same amount I pay in rent.
Flag Sun Feb 3, 2013
Navy Fed usually has overlays or more restrictive guidelines than other lenders. I am able to do a manual underwrites if your DTI ratio is over 43%.
Having a pay raise coming will help and will be able to be counted....we just need to document it. The key is finding out what your residual income is after taking into account all the expenses VA requires to be used when calculating residual income. The Navy Fed person you are speaking with is probably not quite as experienced as you may think.
Flag Sun Feb 3, 2013
Greg Herman, Mortgage Broker Or Lender, Oakland, CA
Sun Feb 3, 2013
On VA Loans there is only one ratio which is total debt, just FYI.
0 votes
Greg Herman, Mortgage Broker Or Lender, Oakland, CA
Sun Feb 3, 2013
Yes the BAH and BAS are part of the income calculation. These numbers are grossed up to be equal to a taxable income and then added into your base income shown on your LES.
0 votes
Brandon, Home Buyer, Fallbrook, CA
Sun Feb 3, 2013
If someone is active duty, is the base pay BAH and BAS make up the income part of a DTI?
0 votes
Greg Herman, Mortgage Broker Or Lender, Oakland, CA
Sun Feb 3, 2013
Last year the income to debt structure for VA loans became prominent through lenders eliminating higher ratios. Used to be the only need was to have enough residual income.
As a certified Military Housing specialist I work with Veterans and assist them in their quest to purchase a home. With 27 years of experience in home lending, I fully understand the current underwriting standards today. Electronic underwriting generally holds at 45% today with 41% for manual underwrites.
Talk to experience, talk to a Certified Military Housing Specialist, talk to me when you are ready!
0 votes
Valli Lopez, Agent, San Diego, CA
Sun Feb 3, 2013
We can go up to 60% but what matters is residual income, after all bills are paid, the VA requires a certain amount per family size be left over: it's something you can google and I can also email you. It's not 42%, its per what the automated underwriter says and then guidelines per lender after that. For me, I can do 50% back end ratio down to a 530 FICO easily.

Contact me as soon as you have a chance,

Valli Lopez
Nmls 980530
619.916.9595 cell
Valli@thebrikhogroup.com
Web Reference:  http://Www.ValliLopez.com
0 votes
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