Sunday, March 24, 2013

Debt To Income Ratios for a Louisville Kentucky VA Mortgage Loan

Debt To Income Ratios for a Louisville Kentucky VA Mortgage Loan



VA’s debt-to-income ratio is a ratio of total monthly debt payments (housing expense, installment debts, and so on) to gross monthly income.  It is a guide and, as an underwriting factor, it is secondary to the residual income.  It should not automatically trigger approval or rejection of a loan.  Instead, consider the ratio in conjunction with all other credit factors.

A ratio greater than 41 percent requires close scrutiny unless:

·   the ratio is greater than 41 percent solely due to the existence of tax-free income (Put notation regarding the tax-free income in the loan file or calculate an adjusted, smaller ratio based on “grossing up” of the tax-free income.), or
·   residual income exceeds the guideline by at least 20 percent.

Loans Closed Automatically with Ratio Greater than 41 percent
Include a statement justifying the reasons for approval, signed by the underwriter’s supervisor, unless residual income exceeds the guideline by at least 20 percent.  The statement must:

·   not be perfunctory, or
·   list the compensating factors justifying approval of the loan.




Joel Lobb (NMLS#57916)Senior  Loan Officer
502-905-3708 cell
502-813-2795 fax
jlobb@keyfinllc.com

Key Financial Mortgage Co. (NMLS #1800)*
107 South Hurstbourne Parkway*
Louisville, KY 40222*