The Number In Teresa's VA Loan File Her Loan Officer Almost Got Wrong
The Number That Almost Got Missed
Teresa found out her VA loan file had a number in it that her loan officer almost got wrong, and that number had nothing to do with her credit score or her down payment. Teresa was buying a home near Fort Eisenhower, Georgia for her family of four, using a VA loan, and on paper her debt-to-income ratio looked high enough to worry about.
A situation like Teresa's comes up often. A borrower's DTI looks high, and the assumption is that the loan is in trouble. But VA loans do not qualify a borrower on DTI alone, and treating it that way is one of the most common mistakes made on VA files.
What VA Actually Looks At
VA guidance is direct about this. Per VA Pamphlet 26-7: "VA's minimum residual incomes (balance available for family support) are a guide. They should not automatically trigger approval or rejection of a loan."
Residual income is the money left over each month after the mortgage payment, debts, and taxes are covered. It is measured against a table broken down by region of the country and family size. For a family of four in the South, on a loan amount of eighty thousand dollars or above, the guideline is $1,003 a month. For loan amounts under eighty thousand dollars, that same family size and region uses $868 a month instead. The tables shift by region too. A family of four in the Northeast has a different guideline than one in the West, and family size changes the number as well, with an added amount for each member beyond five.
How Teresa's File Played Out
For Teresa, the correct approach meant pulling the residual income table for her region and her family size of four, and running her numbers against it line by line before any conclusion was drawn from her DTI alone. Once that calculation was done correctly, Teresa's residual income cleared the guideline for her situation. The high DTI on paper did not tell the whole story.
This is the piece that gets missed most often. A loan officer who stops at DTI and does not run the residual income table correctly can talk a qualified VA borrower out of a loan they were entitled to.
What You Can Do With This
If you are a VA borrower and your DTI has been flagged as a concern, there is one question worth asking directly: can you show me my residual income calculation using the VA Chapter 4, Topic 9(e) table for my region and family size, and walk me through it line by line? A loan officer who works VA files regularly should be able to answer that without hesitation.
This is not about guaranteeing an outcome. Residual income guidelines are exactly that, a guide, and every file is different. But knowing which number actually matters, and asking to see it, puts you in a much stronger position than assuming a high DTI is the end of the conversation.
I'm Jason Sharon, a licensed mortgage broker with Home Loans Inc, and I work VA loan files across multiple states. If you have questions about your own VA qualification, reach out and I'll walk through it with you.
Home Loans Inc - Jason Sharon, Mortgage Broker. Company NMLS #1728740, Jason Sharon NMLS #1281448. Equal Housing Opportunity.