LOAN LIMITS:
The standard zero down VA Purchase Loans are currently limited to $417,000. Zero down purchase loan limits for certain high cost areas can reach $729,250. Qualified borrowers can obtain a loan as high as $1,000,000, with certain down payment requirements. See the maximum VA loan limits for your property.

INCOME LIMITATIONS:
There are currently no restrictions on the amount of income an applicant or the applicant's household can earn.

• Typical Debt to Income Ratio's (DTI) is 31% debt to applicant's income without the new mortgage payment; and 43% debt to applicant's income with all debt including the new mortgage payments;  principal, interest, taxes and insurances (PITI). These ratios can be exceeded in certain cases.
• Cash reserves are not required when purchasing a single family residence within the standard loan limits. Cash reserves of 2 to 6 months of  PITI payments may be required when purchasing a 2 or 4 families property, or when the loan amount and funding fee total exceeds $417,000. Veterans using rental income from investment properties to qualify may be required to show reserves that cover 3 months of PITI payments for each rental property.
• Certain income sources such as non taxed retirement, disability, or child support can be “grossed up” by 125% of the actual income.
• Payment Reserves (the applicant proving they have a certain number of months of reserve payments in the bank) are not required on VA loans written for a 1 to 2 unit property. However, payment reserves may be used to determine a loan approval or as a compensating factor to offset another derogatory credit issue.
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  VA loans require full documentation of the applicant's income. Computer generated pay stubs with year to date information and W2 forms are normally required.  The underwriter will also require a written Verification of Employment (VOE) from the applicant's employer(s). If the applicant's pay stubs do not include a year to date summary, the employer will be required to complete a 24 months employee history on a Verification of Employment form. This information will be verified with the employer by the underwriter. ( Note: falsifying or altering information on income related documentation is loan fraud!) See our section on “ What is Loan Fraud .”
• Employment gaps of 30 days or more will require a Letter of Explanation (LOE), outlining specific employment dates and gaps. This letter must be dated and signed by the applicant.
• Self Employed borrowers are required to provide the past 2 years of tax returns with all pertinent tax schedules.  If an “S” Corporation or a Partnership, business tax returns will also be required. A year to date Profit and Loss (P&L) form is required if applying after July 31st of the current year.
• Co-signed debt can be deducted from the applicant's Debt to Income Ratio by providing 12 months of cancelled checks (fronts and backs) to prove the debt is being paid by another party. If the account is delinquent, the payment must be shown in the applicant's Debt to Income Ratio.
• Debts with less than 10 months to satisfaction need not be included in the applicant's Debt to Income Ratio.

Although not ordered by theVeterans Administration, many lenders are now requiring a minimum credit score of 600. A credit score of 660 or more is required if the loan exceeds $417,000.   

• Traditional bureau reported credit trade lines are required. Alternate credit trade lines such as: non reported installment purchases for furniture, automobiles etc… may not be used. The trade lines must indicate a good payment history in order to be used. Deferred student loans, collections, and derogatory credit will not be counted as a trade line. (Student loans are included in the Debt to Income (DTI) unless written proof of deferral for a period greater than 12 months)
• Verification of Mortgage (VOM) or Verification of Rent (VOR) may allow for a 30 day late in the last twelve months. Zero 30 day late payments in the last 12 months for housing are typically required for a VA cash out refinance.
• Credit history will be used for all applicants who are shown on the application as providing income to service the mortgage payments. A spouse may not necessarily be required to be on the application if their income is not utilized to service the debt.

• A Verification of Rent (VOR) or a Verification of Mortgage is required to document the applicants housing payment history. If this payment history is reported to a credit reporting service, the credit report indicating payment through the current month may be utilized as verification. If the payment history is not reported by a credit reporting agency, a written verification must be received from the creditor or landlord. Verifications of Mortgage and Verifications of Rent provided by a private (non institutional) party will be verified by the underwriter. Applicants who rent or have payments for housing that are paid to a family member will be subject to more in depth underwriter scrutiny.
• Rent free is allowed under VA guidelines with proper verification. An applicant who lives rent free is typically eligible with an approved Rent Free Letter. The letter must be from the party the applicant lives with and state that you live with the party and you are not required to pay rent. The party must be a family member and the letter must include the applicants relationship to the party, the dates in which the applicant has lived in the property, the property address, and the home phone number for that address , The letter should provide an alternate phone number such as a work phone number or cellular number for the party writing the Rent Free Letter. The letter should be signed and dated by the family member of the applicant. ( Note: The signing of a false statement on a Rent Free Letter is considered loan fraud by the applicant and the family member!)
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  Bond for Deeds / Lease Purchase Agreements / Owner Financing will required a copy of the executed agreement and 12 months of the front and back of the cancelled checks for the payments made. Typically, cash payments or money orders are not acceptable. ( Note: providing a fabricated or altered agreement or proof of payment is considered loan fraud by the party altering or fabricating the document(s).)
• College Housing or Military Housing is allowed with a written verification from the institution as to the applicant's residence. Verification by the underwriter is required.

• An applicant who is currently in Consumer Credit Counseling (CCC) is treated like a bankruptcy.
• Chapter 7 Bankruptcy must have been discharged at least 2 years from the date of application. However some lenders may require up to 7 years after the BK was discharged. Documentation showing extenuating circumstances beyond the borrowers control may qualify with less than 7 years from discharge. Extenuating circumstances may include death of the primary wage earner or a serious illness. The applicant can have NO derogatory credit since taking bankruptcy.
• Chapter 13 Bankruptcy, or structured monthly repayments by debtors, currently requires 1 year of on time payments to qualify for VA mortgages. The applicant must receive permission from bankruptcy court to enter into a new mortgage. The Chapter 13 Bankruptcy must be paid out in full, if the applicant is seeking a cash out refinance greater than 85% Loan to Value.
• Foreclosure / Deed in Lieu must have been completely settled at least 36 months prior to date of the application. Here again, some lenders may require up to 7 years from the date of foreclosure. Check with your lender for specific requirements. This requirement may be waived because of extenuating circumstances, such as an illness or death of the primary wage earner. The applicant can have NO derogatory credit since the foreclosure or Deed in Lieu occurred.

• A signed Letter of Explanation is required, addresseing ALL collection accounts, derogatory payment histories, judgments and state or federal tax liens. The letter must be specific and include reasons for the derogatory account and must be date specific.
• All Federal tax liens, Court Ordered Judgments, and/or any items that could affect the properties title, regardless of the age of the indebtedness, must be satisfied at or prior to the loan closing.
• Tax Liens may be subordinated if a payment plan is in place prior to APPLICATION.  A letter from the proper authority is required, stating they will subordinate the lien to the new mortgage holder. The payment on this lien must be included in the applicants Debt To, Income Ratio (DTI). The maximum Loan to Value cannot exceed 100%, including the balance of the lien.

MORE ELIGIBILITY REQUIREMENTS & FAQ's:
Visit the Veterans Administration website at www.homeloans.va.gov/faqpreln.htm