“How do I know if I’m eligible for a VA Home Loan?”

You don't want to take on a financial burden that's more than you can manage. Nobody wants to be buried under unwieldy financial responsibility, and there are many ways the VA works to ensure this doesn't happen to veterans

So to protect veterans, the VA has requirements that borrowers and/or their spouses must set guidelines for the debt-to-income ratio. This ratio helps you to determine whether you can really and reasonably meet the expenses of home ownership.

Figuring out your debt-to-income ratio is easy:

a. Start with a total of mortgage payment (principal and interest, escrow deposits for taxes, hazard insurance, homeowners' dues, etc.) and all recurring monthly revolving and installment debt (car loans, personal loans, student loans, credit cards, etc.).

b. Divide that total by gross monthly income.

c. The maximum ratio to qualify is 41%. If you exceed 41%, the VA has a residual income guideline which can still allow approval for your VA home loan.

The debt to income ratio won't determine if you're eligible for a VA home loan.  There are many other factors in your credit history that come into account, such as:
Your excellent credit history

A history that shows a conservative use of consumer credit

Minimal consumer debt

Long-term employment

Significant liquid assets

Military benefits and more

There's a lot you can do to make your credit rating as high as possible before you apply for your VA Home Loan....and we recommend you get started on it as soon as you know you're in the market for a new home. Read our article about improving your credit scores in this section.