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VA loan underwriting guidelines are among the most flexible of any loan program today. If you’re a veteran and haven’t explored your option to use your VA home loan benefits, it’s time. Even if you think you don’t make enough money to meet the VA loan income requirements, it’s worth looking into — the guidelines are a lot more flexible than you might realize.
Who's Eligible for a VA Home Loan?
Veterans, active duty service members, and National Guard or Reserve members are eligible for VA loans. A surviving spouse can also qualify in some circumstances.
The Department of Veterans Affairs has requirements to qualify based on the amount of time you served, ranging from 90 days to six years, depending on your level of service.
If you’ve never used your VA benefit before — or you did, but sold the property, paid off the loan, and had your VA entitlement reinstated — you may be eligible for a VA home loan with Good News Lending.
VA Loan Income Requirements
Thinking about VA loan income guidelines can be stressful for home buyers. There are many things borrowers need to know about VA loans. And you might wonder if you make enough to meet the VA loan salary requirements. So, what are the income requirements for a VA loan?
The good news is that VA loans don’t have specific income requirements. You don’t have to make a certain amount of money to qualify for a VA loan. Like other loan programs, the lender must believe you can afford to pay back the loan, along with your other debts.
Your debt-to-income (DTI) ratio is one way lenders determine whether the loan is affordable to you or not. The VA doesn’t have a specific DTI requirement, but we like our borrowers to have a ratio no higher than 43%.
This means your current debts plus your new mortgage payment don’t take up more than 43% of your monthly income.
VA Loan Residual Income Requirements
Residual income is the money you have left from your paychecks each month after paying:
- The mortgage
- Taxes
- Insurance
- Federal and state withholdings
- Other qualifying debts, such as credit cards or installment loans
It does not include money needed for food, clothing, utilities, or entertainment. So, how much residual income is enough? It depends on your family size and location. If you’re buying a house on your own and live in Connecticut, you’d need a residual income of at least $450. A family of four buying a home in California requires at least $1,117.
Non-Qualifying Income
Unfortunately, not all income meets the VA loan income requirements. Non-qualifying income is income that lenders can’t use to qualify you for the loan.
Non-qualifying income includes:
- Money won in a lottery or from gambling
- Unemployment income
- One-time bonus income from an employer
In addition, all income you use for qualifying purposes must come from you or someone living in the house.
You cannot use income from anyone not living with you — so, income from a non-occupying co-borrower (like a parent or grandparent) doesn’t count.
Do VA Loans Require Proof of Income?
You’re probably wondering, “Do VA loans require proof of income?” Yes. No matter the loan amount or your credit score, every borrower must verify their income.
Here’s what lenders usually ask for:
- Employment pay stubs
- W-2s and tax returns
- Bank statements
- Financial statements if you're self-employed
Military income is typically accepted and easy to document — you need a copy of your Leave and Earnings Statements.
Can You Get a VA Home Loan without a Job?
VA loans generally require two years of consistent income to qualify. But you might be wondering, “Can I get a VA home loan without a job?”
It might surprise you to discover that being unemployed doesn’t make you ineligible for a VA loan. However, lenders want to make sure you can pay the loan each month — a feat that’s tough to do without a job. But it isn’t impossible.
For example, suppose you receive Social Security benefits, regular retirement income, or disability payments. If you can prove payments will continue for at least three years, you may use it for qualifying.
Other VA Loan Eligibility Requirements
The VA loan income guidelines are a big piece of the puzzle, but other VA loan underwriting guidelines exist.
VA Loan Credit Requirements
The VA doesn’t have specific credit requirements like other loan programs do. However, most lenders prefer credit scores of at least 640 to secure VA loan financing.
DTI for a VA Loan
VA home loans don’t necessarily focus on your debt-to-income ratio. It’s a factor, but lenders are generally more interested in your residual income since that determines affordability.
Still, keeping your DTI in check can ensure you don’t get in over your head.
VA Loan Down Payments
The best news about VA loan requirements is that you don’t need a down payment if the sales price isn’t higher than the home’s appraised value. That doesn’t mean a zero down payment is the best choice — putting money down can reduce the VA funding fee you pay and lower your overall monthly payment.
Property Requirements
VA loans have Minimum Property Requirements (MPRs), but it might not be as strict as you think.
Generally, as long as the home is in good shape, you shouldn’t have trouble securing VA financing. VA loans are available for:
- Single-family homes
- Townhomes
- Condos
- Manufactured homes
- Modular homes
- New construction
- Multi-unit property
Can I Prequalify for a VA Home Loan Today?
If you’re thinking about buying a house with a VA loan, let Good News Lending pre-qualify you today! The VA loan income requirements are flexible and straightforward. Take advantage of the VA home loan benefit and start your dream of owning a home!
