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