🏡 What You Need to Know Before Applying for a VA Home Loan
First of all, congratulations on your decision to become a homeowner! And even better, you’ve chosen to pursue a VA home loan – a mortgage option that’s specifically designed to help military service members, veterans, and their families buy a home with favorable terms and conditions. Before we dive into the income requirements for VA home loans, let’s cover some basics of what you need to know about this type of loan.
What’s a VA Home Loan?
A VA home loan is a mortgage loan guaranteed by the U.S. Department of Veterans Affairs (VA). It’s available to eligible veterans, active-duty military, National Guard and Reserve members, and surviving spouses. VA home loans offer many advantages over conventional mortgages, such as:
| Advantages of VA Home Loans |
|---|
| No down payment required |
| No mortgage insurance premium |
| Limited closing costs |
| Flexible credit requirements |
| Assumable mortgages |
Why Are Income Requirements Important for VA Home Loans?
As with any type of loan, lenders want to make sure that borrowers have the ability to repay the loan. Therefore, VA home loan income requirements are one of the factors that determine whether a borrower is eligible for the loan.
Who Sets the VA Home Loan Income Requirements?
The VA doesn’t have a specific income requirement for VA home loans. Instead, it requires lenders to follow the income standards of the loan program they’re using. There are different loan programs available under the VA home loan program, such as:
VA Home Loan Programs |
Main Features |
|---|---|
VA Guaranteed Loan |
No down payment required; no maximum loan limit |
Native American Direct Loan (NADL) |
No down payment required; for eligible Native American veterans and their spouses |
Adapted Housing Grants |
For veterans with disabilities to buy, build, or modify a home |
Interest Rate Reduction Refinance Loan (IRRRL) |
For veterans with an existing VA home loan to refinance at a lower interest rate |
What Are the Income Standards for VA Home Loans?
The income standards for VA home loans vary depending on the loan program, as well as the lender’s policies. However, there are some general guidelines that can give you an idea of what to expect.
VA Guaranteed Loan Income Requirements
For a VA guaranteed loan, lenders will typically look at your residual income – the amount of money you have left over each month after paying your major expenses such as housing, utilities, and debt payments. Your residual income must meet a certain threshold based on your family size and where you live.
As of 2021, the residual income requirements for a VA guaranteed loan are:
Family Size |
Northeast/Midwest |
South |
West |
|---|---|---|---|
1 |
$1,064 |
$1,003 |
$1,219 |
2 |
$1,489 |
$1,404 |
$1,710 |
3 |
$1,531 |
$1,444 |
$1,761 |
4 |
$1,636 |
$1,537 |
$1,882 |
5 |
$1,757 |
$1,655 |
$2,006 |
Over 5 |
Add $90 for each additional member |
Add $85 for each additional member |
Add $104 for each additional member |
Native American Direct Loan Income Requirements
The NADL program has slightly different income requirements than the VA guaranteed loan program. The borrower’s income must not exceed 115% of the median income for the area where the property is located. The exact income limit varies by location and family size.
Adapted Housing Grants Income Requirements
Eligibility for adapted housing grants is based on the veteran’s service-connected disability rating. There are no income requirements for this program.
IRRRL Income Requirements
Because the IRRRL program is designed for veterans who already have a VA home loan, there are no income requirements for this program.
🤔 Frequently Asked Questions About VA Home Loan Income Requirements
1. What is the minimum income requirement for a VA home loan?
As mentioned earlier, the VA doesn’t have a specific income requirement for VA home loans. Instead, lenders use the income standards of the loan program they’re using. The income requirement varies depending on the program and the lender’s policies.
2. Is there a maximum income limit for VA home loans?
No, there’s no maximum income limit for VA home loans. However, lenders do look at borrowers’ income to make sure they can repay the loan.
3. What types of income are considered for VA home loan eligibility?
Lenders typically consider all types of income, including:
- Salary and wages
- Tips and commissions
- Pension and retirement income
- Disability compensation and pension
- Social Security income
- Investment income
- Alimony and child support
4. Can I use my spouse’s income for a VA home loan?
Yes, you can use your spouse’s income to qualify for a VA home loan, as long as your spouse is a co-borrower on the loan.
5. Do I need a job to get a VA home loan?
No, you don’t necessarily need a job to get a VA home loan. However, you need to have a stable source of income that’s sufficient to cover your mortgage payments.
6. How do lenders verify my income for a VA home loan?
Lenders typically verify your income by requesting documents such as:
- Pay stubs
- W-2 forms
- Tax returns
- Bank statements
- Proof of other income sources
7. Can I use VA disability income to qualify for a VA home loan?
Yes, you can use VA disability income to qualify for a VA home loan. VA disability income is considered stable and reliable income, and it’s not subject to federal income tax.
8. Can I use rental income from an investment property to qualify for a VA home loan?
Yes, you can use rental income from an investment property to qualify for a VA home loan, as long as you meet the lender’s requirements for rental income. Generally, lenders will require at least two years of experience as a landlord and proof of rental income through tax returns or other documentation.
9. Can I use income from a part-time job to qualify for a VA home loan?
Yes, you can use income from a part-time job to qualify for a VA home loan, as long as your income is sufficient to cover your mortgage payments and other expenses.
10. Can I use alimony and child support income to qualify for a VA home loan?
Yes, you can use alimony and child support income to qualify for a VA home loan, as long as you can provide proof of receipt and the income is expected to continue for at least three years.
11. How does a change in income affect my VA home loan eligibility?
If your income changes after you’ve been pre-approved for a VA home loan, you’ll need to inform your lender as soon as possible. Depending on the extent of the change, it could affect your eligibility for the loan.
12. What if I have additional sources of income besides what’s listed on my application?
If you have additional sources of income besides what’s listed on your application, you should inform your lender as soon as possible. Depending on the type and amount of income, it could affect your eligibility for the loan.
13. Can I get a VA home loan with a low credit score?
While there’s no minimum credit score requirement for VA home loans, most lenders will have their own credit score standards. Generally, a credit score of 620 or higher is preferred, but some lenders may accept lower scores.
👉 Ready to Apply for a VA Home Loan?
Now that you know all about VA home loan income requirements, you’re one step closer to becoming a homeowner. Remember, while income requirements are important, they’re just one piece of the puzzle. You’ll also need to meet other eligibility criteria, such as having a good credit score and a stable source of income. If you’re ready to apply for a VA home loan, start by finding a lender that specializes in VA loans and getting pre-approved. Good luck!
đź“ť Closing Disclaimer
The information contained in this article is for informational purposes only and should not be considered legal, financial, or professional advice. Always consult with a qualified professional before making any decisions regarding your finances or homeownership. The author and publisher disclaim any liability for any direct, indirect, or consequential loss or damage arising from the use or reliance upon any information contained in this article.