Are you eligible for a VA loan in Indiana? Know how you can boost your chances for approval!
Because they are relatively easier to qualify for as compared to other conventional loan types and also backed by the U.S. Department of Veterans Affairs, VA loans are a popular choice among veterans. VA loans provide veterans, active duty service members, and widowed military spouses with an excellent opportunity to finance properties without a down payment. If you are also planning to buy this loan, it is important to ensure whether you are eligible for the benefits or not. When determining your eligibility, lenders look at several factors—apart from the documentation (DD214. Statement of Service, COE)—to decide if you qualify for the loan. Here are some of them-
Decent Credit History - Though there is no minimum credit requirement set by the Department of Veterans Affairs for a VA loan, private lenders are allowed to set their requirements that the homebuyer must meet. Lenders typically look for borrowers with a credit score of 620 or higher. There are lenders which also go below the 620 marks, but poor credit history can result in your application getting rejected even if you meet all the other requirements. To improve your credit history, try to first settle and pay outstanding debts, keep credit card balances low, and fix errors (if there are any).
Low Debt-to-Income (DTI) Ratio - The debt-to-income ratio is an important parameter for lenders to check your qualification for a VA loan. It refers to the percentage of your gross monthly income that goes towards debts. The acceptable debt-to-income ratio for a VA loan is 41%. If your DTI ratio is higher than the acceptable limit, you may have a hard time getting a VA loan. To lower your DTI ratio, you can try cutting down your debt load as soon as possible, use debt repayment methods such as debt snowball or debt avalanche, or consider professional debt relief programs. A co-signer may also help you successfully quality for a VA loan.
Stable Income - VA borrowers are required to maintain a certain amount of income left over each month once all their major expenses are paid. The excess (known as residual income) covers basic family needs, such as food, transportation, and medical care. By enforcing these residual income requirements, VA increases the chances of its borrowers earning enough income to meet all their financial obligations while also ensuring that they have a cushion in the event of an emergency.
People eligible for VA loans in northwest Indiana are also required to pay VA funding fee (in most cases) that goes into a pool of funds that ensures the lenders in case the borrower defaults.
To know about your VA loans in Indiana, contact the A&M Mortgage Group. We are readily available to provide comprehensive answers to your questions and can help you get the VA benefits you deserve!