How Much Do I Qualify for a VA Loan?

Find out how much you may qualify for with a VA Loan by following these simple steps.

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Introduction

The Department of Veterans Affairs (VA) offers a home loan guaranty benefit and other housing-related programs to help eligible service members, veterans, reservists and certain unmarried surviving spouses buy, build, repair or adapt a home. For more information, visit the VA Home Loans website.

To use this benefit, you’ll need a Certificate of Eligibility (COE). This shows the VA has approved you for the loan benefit. You can get your COE through eBenefits , by mail , or through your lender . If you have questions about your eligibility, contact a VA regional loan center .

If you qualify for the VA loan guaranty program , there is no limit on how much you can borrow to finance your home. However, there are limits on the amount of liability that the VA can assume, which usually affects the amount of money an institution will lend you. The loan limits are the same as for conventional financing . borrowers can finance 100% of the purchase price of their home. Additionally, they may finance up to $6,000 in energy efficient improvements .

How to Use the Loan Limit Look-up Tool

To use the Loan Limit Look-up Tool, enter your city and state or ZIP code, then select the type of loan you are interested in. You will then be able to see the maximum amount you may be able to borrow, as well as the highest loan limit for which you may qualify.

How to Calculate Your Loan Amount

To calculate your loan amount, lenders use a formula called the “debt-to-income ratio.” This formula compares your monthly debt obligations to your monthly income. Lenders use two DTI ratios: a “front-end” ratio and a “back-end” ratio. The front-end ratio compares your monthly housing costs — including your mortgage payment, property taxes, and insurance — to your monthly income. The back-end ratio adds any other monthly debt payments, such as credit card bills or student loans, to your monthly housing costs.

To calculate your DTI ratios, lenders multiply your gross monthly income by a pre-determined percentage. For the front-end ratio, the maximum percentage is usually 28%. For the back-end ratio, the maximum percentage is usually 36%. (These percentages may be higher if you’re applying for a jumbo loan or an investment property.)

For example, let’s say you have a gross monthly income of $4,000. If 28% of that is $1,120, your front-end DTI ratio would be $1,120/$4,000 = 0.28. If 36% of that is $1,440, your back-end DTI ratio would be $1,440/$4,000 = 0.36.

To calculate your loan amount using the DTI method:

1) Determine your gross monthly income;
2) Multiply that figure by 28%;
3) Subtract any other debts you may have from that amount;
4) The resulting figure is the maximum loan amount you can afford.

How to Get Pre-Approved for a VA Loan

If you’re a Veteran or active service member, you may be eligible to get a VA loan. VA loans are made by private lenders and backed by the Department of Veterans Affairs, so they don’t require private mortgage insurance (PMI). If you’re considering a VA loan, getting pre-approved can help you determine how much home you can afford and could make the home-buying process smoother.

Here’s how to get pre-approved for a VA loan.

1. Get Your Credit Score and Check Your Credit Report
2. Find a Lender That Specializes in VA Loans
3. Get Pre-Approved for a VA Loan
4. Gather Required Documents for Your Mortgage Application

How to Find a VA-Approved Lender

You can get a VA-backed loan from a private lender, like a bank, credit union, or mortgage company. You can also buy a home directly from the Department of Veterans Affairs (VA) or the Department of Housing and Urban Development (HUD).

When you apply for a VA-backed home loan, you’ll work with a loan specialist at your local VA Regional Loan Center. Your loan specialist will help you complete the required paperwork and approach private lenders on your behalf to get you a VA-backed loan.

If you want to buy a home with a VA-backed loan that is already built or is being built, you may be able to work with a builder who participates in the VA home-loan program.

When you’re ready to start building or buying your home, your loan specialist will help connect you with a real estate professional who also participates in the VA home-loan program so that they can help you find an eligible property.

Conclusion

You can typically qualify for a VA loan if you have served in the U.S. military for at least 90 days during wartime, or 181 days during peacetime. If you’re a reservist or national guard member, you may also be eligible after six years of service. However, there are other factors that affect your eligibility, such as your income, credit score, and debt-to-income ratio. The best way to find out if you qualify for a VA loan is to contact a VA-approved lender.