VA Loans:  41

 

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The VA (Veterans Administration) doesn't make loans.  The VA guarantees loans.  Eligible veterans, surviving spouses of eligible veterans, and members of the armed forces on active duty can all apply for VA loans.  To be eligible, veterans must have served on active duty for specific periods of time. 

 

The VA uses a 41 percent "total obligations" ratio and then subtracts the borrower's total obligations from the gross income.  The remainder** must exceed the requirement the VA publishes in the Table of Residual Incomes.  

 

Divide your annual gross income by 12 

Example:  $48,000 ÷ 12 = $4,000 per month gross income

 

Multiply your monthly gross income by .41

Example:  $4,000 x .41 =  $1,640 per month maximum allowed for housing expenses  (PITI), plus recurring debt

 

Subtract maximum allowed housing expenses and recurring debt from gross income

Example:  $4,000 - $1,640 = $2,360**