VA Loan Debt to Income Ratio

How much of your income can you afford for a house payment?

Another fact that is considered when determining what loan amount a borrower can qualify for is the debit to income ratio. Most lenders use this ratio when determining a pre-approval amount, but the VA also looks at the ratio. In fact, the VA takes additional measures into consideration to determine if the borrower can adequately repay the loan. The VA may look at the overall square footage of the house being purchased, as well as ongoing expenses such as childcare. These, as well as additional monthly expenses, are examined in the approval process.

Along with the expenses, the borrower's credit score and assets are also examined to determine the borrower's debit to income ratio. The actual maximum debt that the VA or a lender will allow for a borrower can vary.

For the VA streamline refinance, debt ratio is not considered, nor is it a factor, in the loan approval process. In the VA’s eyes, if you could originally afford the loan, then you should be able to continue to afford it with a lower interest rate.