What is a qualifying debt-to-income ratio in VA?

Per VA debt to income ratio requirements, there is no maximum DTI limit on VA loans if the borrower can get an approve/eligible per automated underwriting system (AUS) findings. The key to getting AUS approval is to have strong income and timely payments in the past 12 months. It is a well-known statistic that many Americans are in debt. There have been studies that show up to 8 out of 10 Americans are in some kind of debt. Well, veterans are part of those statistics. This may be holding veteran home buyers back from obtaining a mortgage.

VA Debt To Income Ratio Overlays

Most lenders have lender overlays on their VA Loan programs.

Most lenders have lender overlays on their VA Loan programs. There is Debt to Income or DTI guidelines that must be followed. Per VA debt-to-income requirements and guidelines, the Department of Veteran Affairs does not have a maximum DTI cap like other loan programs.

VA Residual Income Requirements

VA does require residual income that will also need to be met. This is something that can be very confusing in the process. Most VA loans do not require a down payment The 100% financing on VA Home Loans makes it easier to obtain home loans for the men and women who served this great Nation. But even without a down payment, many Veterans are having trouble qualifying. The two most common reasons for that are debt to income and credit score. In this article, we will discuss and cover VA Mortgage Debt To Income Ratio Guidelines With No Overlays.

How Mortgage Underwriters Calculate Debt To Income Ratios On VA Loans

Debt to income is calculated with two important percentages:

  • front-end debt to income
  • back end debt to income

This is one of the key factors to obtain an AUS approval. The great news on VA Loans is the leniency on the VA Guidelines.  The Department of Veteran Affairs (VA) does not have a maximum debt to income ratio cap. VA does not have a minimum credit score requirement. There are instances where a veteran will get an automated approval with Debt to Income over 60% DTI.

VA Automated Underwriting System Finding Approvals

The reason, why VA borrowers can get an automated underwriting system approval with over 60% debt to income ratios, is due to the following factors:

  • high residual income by veteran borrowers
  • could be from a high credit score or high asset account
  • If veteran borrowers do meet the AUS Approve/Eligible findings requirements may pass a Manual Underwrite

VA Lenders With No Overlays

Why are we saying that the Department of Veteran Affairs has no maximum DTI caps and no minimum credit score requirements on this blog but most lenders have DTI and credit score requirements? This is because most lenders have VA Lender Overlays.

VA Lenders With No Lender Overlays

What VA Mortgage Overlays are is when a particular lender has higher mortgage guidelines on VA Loans than those. required by the Department of Veteran Affairs. Capital Lending Network, Inc. has no overlays on VA Home Loans. CLN Mortgage has ZERO OVERLAYS on all government and conventional loan programs. Not too many direct lenders have NO OVERLAYS on government and conventional loans.

Automated Underwriting System Approval On VA Loans With Bad Credit

Capital Lending Network, Inc. has zero lender overlays on VA Loans. We just follow VA Mortgage Debt To Income Ratio Guidelines that are rendered by the Automated Underwriting System (AUS).

Capital Lending Network, Inc. has zero lender overlays on VA Loans. We just follow VA Mortgage Debt To Income Ratio Guidelines that are rendered by the Automated Underwriting System (AUS). If VA AUS renders an approve/eligible per AUS on a 65% DTI veteran borrower, we will close that VA Loan.

VA Loans With 500 Credit Scores

If the Automated Underwriting System renders an approve/eligible on a 500 credit score veteran borrower. Capital Lending Network, Inc. will close that VA Loan. Of course, the veteran borrower needs to meet all conditions and stipulations on the AUS Findings.

VA Chapter 13 Bankruptcy Mortgage Guidelines On VA Loans

Veteran borrowers who cannot get an approve/eligible per AUS FINDINGS but get a refer/eligible can qualify for VA Loans with Michael Gracz at Capital Lending Network, Inc. via manual underwriting. Manual Underwriting is also for borrowers who are in a current Chapter 13 Bankruptcy or recently gotten a Chapter 13 Bankruptcy discharged without a 2-year seasoning.

VA Manual Underwriting Guidelines

If the veteran borrower needs to go with manual underwriting, there are more strict DTI qualifications, see below:

  • A credit score below 580 max DTI is 31/43
  • 580 and above max DTI is 31/43 with no compensating factors
  • 580 and above max DTI is 37/47 with one compensating factor
  • 580 and above max DTI is 40/40 with no discretionary debt
  • 580 and above max DTI is 40/50 with two compensating factors

Borrowers may be running into some common lender overlays when it comes to debts. Many lenders have extra requirements when it comes to installment debts and student loans. CLN has ZERO OVERLAYS.

VA Debt To Income Ratio Requirements On Installment Debts

The VA guideline on installment debts with less than 10 payments states this payment can be omitted from the borrower’s overall debt to income ratio calculations by underwriters. Student loans are commonly over-calculated against debt to income ratios. The common misconception is mortgage underwriters must count 1% of student loan balance against borrowers DTI, but that is incorrect.

Since January 23, 2017, the VA has used the following formula to calculate a monthly student loan payment:

  • Use 5% of the total student loan balances
  • Then divide that number by 12

This yields a monthly payment to count against DTI.

Example – $50,000 student loan.

  • $50,000*5%=$2500
  • $2,500 / 12 months = $$208.34 Monthly Payment

Lenders must use the payment that reports to the credit report if the amount on the report is higher than the payment from the above calculation.

  • For student loans that are deferred for 12 or more months, a monthly payment does not need to be calculated
  • Veteran Borrowers must document the loan or loans will not have a payment for a FULL 12 months from the closing date

VA Lenders With With No Lender Overlays Overlays

With the majority of lenders putting extra overlays on their VA loan programs, doing research can be very confusing.

  • Do not let this deter you from the home of your dreams
  • With a simple Google search, most veterans see they must have a 620 credit score
  • Please remember, that is an overlay

With all the differences from lender to lender, please contact us CLN Mortgage at 800-900-8569. Borrowers will then be paired with a licensed loan officer in your state.

Denied For A VA Loan?

The majority of clients at Capital Lending Network, Inc. have been turned down by their current lender due to lender overlays. If for some reason we cannot get you qualified today, we will put you in a plan so you can accomplish your goal of homeownership. There is light at the end of the tunnel. There are very few situations we have not seen before. Stop making your landlord rich and start building equity in your dream home ASAP.

About The Author Of VA Debt To Income Ratio Requirements

Michael Gracz is the author of this blog on VA Debt To Income Ratio Requirements. Mike Gracz is a senior writer and contributing editor of Capital Lending Network, Inc. News.

Michael Gracz is the author of this blog on VA Debt To Income Ratio Requirements. Mike Gracz is a senior writer and contributing editor of Capital Lending Network, Inc. News. Mike Gracz is also a senior loan officer and the National Sales Manager for CLN Mortgage Mortgage. Mike is an expert in originating and funding VA Loans and is known nationwide for him being a direct lender with no mortgage overlays on government and conventional loans.

CLN Approves VA Loans Other VA Lenders Cannot Do

Over 75% of MIke Gracz borrowers are folks who could not qualify at other lenders or had last-minute loan denials at other lending companies due to their mortgage overlays. Borrowers who need to qualify for VA Loans with no overlays can contact Michael Gracz at 800-900-8569 or text, Mike, for a faster response. Michael Gracz is available 7 days a week, evenings, weekends, and holidays.


Michael Gracz NMLS 1160212 is a veteran mortgage loan officer at Nexa Mortgage LLC. Mike can help borrowers with less than perfect credit and higher debt-to-income ratios. Due to Nexa Mortgage being a no overlay lender on government and FHA Loans, Mike can structure any less than perfect borrowers' files and help them qualify for a home loan in a matter of a short time. It is not if you can qualify for a mortgage with Mike but when. Mike Gracz can be reached at 630-659-7644 or email at mgracz@gustancho.com

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