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TimtheGuy - Okay I'm obviously confused about the debt/income ratios on VA loans. That's what I was told at a finance class, and on my mortgage calc, there's a button I can push for VA/FHA that's got the debt/income ratios lower than conventional (Fannie Mae/Freddie Mac). I'm really confused now. How about FHA - is it different than VA? What is the preferred debt/income ratio for a VA loan.
Note to rettgo - Definitely get in touch with a good lender who will run the numbers for you for both VA & conv financing, and consult with you about your options on handling the closing costs.
TimtheGuy - Okay I'm obviously confused about the debt/income ratios on VA loans. That's what I was told at a finance class, and on my mortgage calc, there's a button I can push for VA/FHA that's got the debt/income ratios higher than conventional (Fannie Mae/Freddie Mac). I'm really confused now. How about FHA - is it different than VA? What is the preferred debt/income ratio for a VA loan.
Note to rettgo - Definitely get in touch with a good lender who will run the numbers for you for both VA & conv financing, and consult with you about your options on handling the closing costs.
TimtheGuy - Okay I'm obviously confused about the debt/income ratios on VA loans. That's what I was told at a finance class, and on my mortgage calc, there's a button I can push for VA/FHA that's got the debt/income ratios higher than conventional (Fannie Mae/Freddie Mac). I'm really confused now. How about FHA - is it different than VA? What is the preferred debt/income ratio for a VA loan.
Note to rettgo - Definitely get in touch with a good lender who will run the numbers for you for both VA & conv financing, and consult with you about your options on handling the closing costs.
Thanks for all your knowledgeable help, Tim.
Wow, I can't believe you have a button for that on your calculator.
Traditionally there were strict DTI ratios, which were like 29%/41% for FHA (now raised to like 30 or 31/43%) and a straight 41% for VA. The first ratio for FHA is the 'housing ratio' (just the total house payment vs. income) and the 41% would be the total DTI ratio. VA didn't care about a housing ratio just a total DTI.
FYI-conventional used to operate stricktly under DTI ratios as well that may have been just slightly less (before my time ).
However, with the advent of automated underwriting we can far surpass these ratios. We can now go as high as 55% for well qualified borrowers on the FHA and probably just slightly less on the VA. On conventional loans we can get approvals considerably higher than that (scary I know).
The only time we have to stick to the strict 41% is when we are forced to do a "traditional underwrite". This happens when the borrower has no credit scores (yes we can do FHA & VA for borrowers with no credit history) or when automated underwriting denies the file.
So, with automated underwriting there really are no set DTI numbers. You can continue to use your calculator numbers for a general idea, but we can probalby actually go higher today.
FHA & VA loans do have some similarities, especially with regard to interest rate pricing. VA interest rates are based on FHA rates with a "price hit" of .25. So, if we could do a FHA loan today at 6.5% with a 0.75% origination fee we could do a VA loan at 6.5% with a 1.0% origination fee. Same rate just slightly higher closing cost (extra $500 on a loan of $200k). They are also similar in that they are government backed any require the property to be up to certain standards. The appraisers have to be FHA/VA approved. When doing VA loans the lender does not get to choose the appriaser. He will be assigned.
Being government backed they involve extra paperwork and approval to originate them. Smaller broker operations/originators usually are not approved/signed up to do them.
Good question Gretchen. I know many agents who just say "Oh No" when FHA/VA is mentioned. One last note the FHA seriously reduced the appraisal requirements a couple of years ago so there are not as many pesky repairs required. The most common repairs needed are peeling paint on pre 1978 homes (lead) and GFI outlets near water.
Thanks so much for the detailed response, Tim. I'll tell you what, a really good mortgage guy (gal) is worth their weight in gold. Once you've had a deal fall apart, or nearly fall apart because of an incompetent loan officer, you really appreciate the loan officers who really "know their stuff", are honest and upfront with clients - taking time to explain things, and who work hard to find the best product for that particular client. Thanks!!!!
Thanks so much for the detailed response, Tim. I'll tell you what, a really good mortgage guy (gal) is worth their weight in gold. Once you've had a deal fall apart, or nearly fall apart because of an incompetent loan officer, you really appreciate the loan officers who really "know their stuff", are honest and upfront with clients - taking time to explain things, and who work hard to find the best product for that particular client. Thanks!!!!
I couldn't agree with you more. Tim I wish you were here!!!! LOL.
If you're considering a VA loan, I would also look at the FHA, and MyCommunity mortgages.
VA has a HIGH funding fee, and is waived if you're disabled.
It should be around 2.2%, and this is just an EXTRA cost besides origination fees, underwriting, attorneys, title fees, title insurance, etc
VA appraisals are also the strictest compared to other mortgages.
I had a customer who was having her house built in a new subdivision.
The workers drove a dump truck on the front sidewalk (next to the street), and the sidewalk cracked. The VA appraiser came out, and the loan was declined until that sidewalk was fixed. They also have guidelines for a certain amount of outlets per room, railings for 2 steps!!!, etc.
Very strict on
If the house is brand new, I would ask them if they build conforming to VA guidelines.
Most of my military customers take the FHA loan instead.
how did everything go? did you end up taking the VA loan?
did you look at the FHA and Mycommunity?
We are actually in the process of working with a mortgage broker and she is going to get back with us and go over the different types of loans. At first I mentioned just the VA loan but after your suggestion, asked her to explain the other loans to see what works best for us. I'll let you know what we decide. Charlotte NC was our first choice of places to live but due to the hubby's job, we opt for GA. Not too far from home though...
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That's what I was told at a finance class, and on my mortgage calc, there's a button I can push for VA/FHA that's got the debt/income ratios lower than conventional (Fannie Mae/Freddie Mac). I'm really confused now. How about FHA - is it different than VA? What is the preferred debt/income ratio for a VA loan.
I just love a good loan officer
Amen to that
