Mortgage math can be confusing when looking at income and debt. What is the deal with Debt-to-Income ratio, and what does the VA require for this?

Mortgage math can be confusing when looking at income and debt. What is the deal with Debt-to-Income ratio, and what does the VA require for this?

Debt-to-Income (DTI) ratio is your total monthly debt payments divided by your gross monthly income.

Let’s assume you are an E-6 over 8 years (base pay of about $3500/month), with housing allowance of $1500/month, and subsistence allowance of $365/month. Your total monthly income is $5365/month.

VA guidelines do not have DTI limits, but as a rule of thumb, most loan officers limit pre-approvals to 50%. So, if you make $5,365/month, you would most likely not be issued a pre-qualification letter with a mortgage payment that exceeds $2,682 minus your other monthly debts.

Those other debts include car payments, student loans (which have special circumstances), credit card minimum payments, boat loans, timeshares, military star card, etc.

Krista McCallum2020-05-22T14:45:25-07:00