Debt to Income Ratios

The VA uses "Debt to Income" ratios to help assess whether a borrower can afford to repay the loan. Most loans out there today will use some form of this, but the VA also takes additional items into consideration regarding repayment. For instance, the square footage of the house, as well as if the borrowers have ongoing expenses for children. A person who doesn’t have kids will have more funds available to repay than someone making the same amount of money but has no children.

Depending on other factors, such as credit score and assets, the actual maximum debt that can be allowed to approve a loan can vary.

The one time debt ratio is not a consideration is with a VA streamline refinance. The VA believes that if you could afford the loan initially, then you can afford it now with a lower interest rate.