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Joe LaVallie

VA loans and residual income

Tuesday, June 11, 2013 - Article by: Joe LaVallie - HomeStreet Bank - Message

First-time buyers are driving the market. One of the most popular loan programs for first-time buyers is the VA loan. The VA has maintained low default rates because of the residual income test. Residual income is the amount of money the borrower has after subtracting their monthly payments. Borrowers must meet the minimum residual income standards which vary by both family size and geography. If you have a question about VA loans please feel free to contact me.

VA Required Residual Income Estimates. The actual income requirements vary by region:

Family size of 1: $450

Family size of 2: $750

Family size of 3: $900

Family size of 4: $1025

Family size of 5: $1065

How can the Residual income figures help your buyers. The maximum allowable debt-to-income ratio is 41% of the gross income. IF YOUR DEBT-TO-INCOME RATIO IS ABOVE 41% AND YOUR RESIDUAL INCOME IS OVER 120% OF THE STATED GUIDELINE YOU MAY STILL QUALIFY FOR THE LOAN.

Why is the VA experiencing lower default rates than other types of mortgages? The use of residual income and the agency's efforts in helping borrowers avoid foreclosure are big factors in reducing delinquencies and keeping people in their homes.
Joe LaVallie
The Integrity Team
Mortgage Banker
HomeStreet Bank
22001 66th Ave W
Mountlake Terrace WA 98043
NMLS ID#111363
425-678-7604 Direct
1-800-761-7788 ext 7604
206-743-4722 Cell
Fax 206-512-1911
To Apply Online

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