Are you a veteran or active-duty service member looking to buy a home? A VA loan is a great option to consider. With competitive interest rates and flexible requirements, VA loans are designed to help veterans and active-duty service members become homeowners. However, before you apply for a VA loan, you need to understand the income guidelines set by the U.S. Department of Veterans Affairs (VA).
The Basics of VA Loan Income Guidelines
The VA sets income limits to determine eligibility for VA loans. These limits vary depending on the size of the household, the location of the property, and other factors. Generally, the VA requires borrowers to have stable and reliable income to repay the loan.
Here’s what you need to know about VA loan income guidelines:
Eligibility Criteria
To be eligible for a VA loan, you must meet the following income criteria:
Household Size |
Region 1 |
Region 2 |
Region 3 |
Region 4 |
Region 5 |
|---|---|---|---|---|---|
1 |
$70,025 |
$80,375 |
$66,525 |
$69,425 |
$100,425 |
2 |
$90,175 |
$103,875 |
$86,725 |
$90,525 |
$130,025 |
3 |
$107,525 |
$124,700 |
$103,075 |
$107,250 |
$155,350 |
4 |
$125,275 |
$144,425 |
$119,425 |
$124,425 |
$179,025 |
5+ |
Add $8,550 for each additional family member |
Add $9,875 for each additional family member |
Add $8,550 for each additional family member |
Add $8,550 for each additional family member |
Add $11,700 for each additional family member |
Note: The above table shows the 2021 VA loan income limits for different regions in the United States. Region 1 includes California, Hawaii, Alaska, and other high-cost counties. Region 5 includes Guam, American Samoa, and other territories.
Types of Income
The VA considers various types of income when evaluating your eligibility for a VA loan:
Base Pay: This is your regular pay from your military service, including basic pay and special pay.
Bonuses and Allowances: This includes any additional payments you receive from your service, such as bonuses for reenlisting or hazardous duty pay.
Income from a Second Job: If you have a second job, the VA will consider the income from that job as long as you have been working there for at least two years.
Rental Income: If you plan to rent out a portion of your property, the VA may consider the rental income as part of your total income.
Retirement Income: If you are retired and receiving retirement income, the VA may count that income towards your eligibility requirements.
Debt-to-Income Ratio
In addition to income, the VA also considers your debt-to-income (DTI) ratio when determining your eligibility for a VA loan. Your DTI is the percentage of your gross monthly income that goes toward paying off debt. The VA typically requires a DTI ratio of no more than 41%. However, borrowers with compensating factors, such as a high credit score, may be eligible for a higher DTI ratio.
Residual Income Requirements
The VA also requires borrowers to have a certain amount of residual income after paying all monthly expenses. Residual income is the money left over after paying all debts and living expenses, such as food, clothing, and entertainment. The VA establishes residual income requirements based on family size, region, and other factors.
FAQs About VA Loan Income Guidelines
1. What is the minimum credit score for a VA loan?
There is no minimum credit score requirement for a VA loan. However, most lenders prefer borrowers to have a credit score of at least 620.
2. Can I use a cosigner to qualify for a VA loan?
Yes, you can use a cosigner to qualify for a VA loan. However, the cosigner must meet the VA’s eligibility requirements and be willing to take responsibility for the loan if you are unable to repay it.
3. Can I include my spouse’s income when applying for a VA loan?
Yes, if you are married, you can include your spouse’s income when applying for a VA loan. However, your spouse must also meet the VA’s eligibility requirements.
4. What if my income fluctuates?
If your income fluctuates, the VA may consider your average income over the past two years when evaluating your eligibility for a VA loan.
5. Can I use rental income from other properties to qualify for a VA loan?
No, you cannot use rental income from other properties to qualify for a VA loan. The rental income must come from the property you intend to purchase with the VA loan.
6. Do I need to provide tax returns to qualify for a VA loan?
Yes, you will need to provide tax returns for the past two years to qualify for a VA loan. This helps the lender verify your income and calculate your DTI ratio.
7. How much residual income do I need to qualify for a VA loan?
The VA sets residual income requirements based on your family size, region, and other factors. Generally, the VA requires borrowers to have a certain amount of residual income after paying all monthly expenses.
8. Can I use my VA benefits more than once?
Yes, you can use your VA benefits more than once as long as you meet the eligibility criteria.
9. Can I buy a multi-unit property with a VA loan?
Yes, you can buy a multi-unit property with a VA loan, as long as you occupy one of the units as your primary residence.
10. What is the funding fee for a VA loan?
The funding fee for a VA loan varies depending on the size of the down payment, the type of service, and other factors. The funding fee ranges from 0% to 3.6% of the loan amount.
11. What is a Certificate of Eligibility?
A Certificate of Eligibility (COE) is a document that shows you are eligible for a VA loan. You can apply for a COE through the VA or ask your lender to help you obtain it.
12. Can I get a VA streamline refinance if my income has decreased?
Yes, you can get a VA streamline refinance even if your income has decreased. The VA does not require income or employment verification for a streamline refinance.
13. What if I have a bankruptcy or foreclosure on my record?
If you have a bankruptcy or foreclosure on your record, you may still be eligible for a VA loan. However, you will need to wait a certain amount of time after the bankruptcy or foreclosure before you can qualify.
Conclusion: Take Advantage of VA Loan Income Guidelines
VA loan income guidelines are an essential part of the VA loan application process. By understanding these guidelines, you can determine your eligibility for a VA loan and ensure that you have the necessary income to repay the loan. If you meet the VA’s requirements, a VA loan can be a great option to help you achieve your dream of homeownership.
Don’t wait any longer! If you are a veteran or active-duty service member, take advantage of the benefits and flexibility of VA loans. Apply today and start your journey towards becoming a homeowner!
Closing Disclaimer
The information provided in this article is for educational and informational purposes only and does not constitute financial or legal advice. Please consult with a qualified professional for advice specific to your situation.