Can I Qualify for VA Loan with High DTI in 2024?
Are you a military member interested in finding out if you are still eligible for a VA loan even if you have a high debt-to-income ratio (DTI)? You’re not alone—this is one of the most frequently asked questions we get from veteran borrowers.
The short answer is yes! VA loans are known for their flexible guidelines; even with a high DTI, you still have options.
In this updated blog post, we’ll break down everything you need to know about VA loans with high DTI in 2024. We’ll review VA loan benefits, how to qualify, what to do if your lender says no, and why Non-QM Mortgage Lenders could be your key to approval—even if other lenders turned you down.
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Why VA Loans Are the Best Mortgage Program in the U.S.
Let’s first discuss why VA loans are regarded as the top mortgage program before we explore how to meet the requirements for a VA loan with a high DTI.
- No down payment required – You can finance 100% of the home’s purchase price.
- No monthly mortgage insurance premium – Unlike FHA loans, VA loans don’t require you to pay mortgage insurance every month.
- Low interest rates – Because the government backs VA loans, they usually offer lower rates than other loan types.
- No maximum loan limit – As of 2020, VA loans don’t have a cap on the loan amount, giving you more flexibility.
- Flexible credit and DTI guidelines – VA loans are among your best options if you have lower credit scores or a higher debt load.
What Is DTI and Why It Matters
Your debt-to-income ratio (DTI) is a basic formula that lenders utilize to assess the proportion of your monthly income dedicated to repaying debts. It includes car loans, student loans, credit card payments, and even child support. The higher your DTI, the more of your income is going to debt, which can make lenders hesitant to approve your mortgage application.
If you earn $5,000 monthly and your total monthly debt payments amount to $2,000, your DTI would be 40%.
VA loans, however, have some of the most lenient DTI requirements in the industry, making it possible for many veterans to qualify—even with a high DTI.
Can I Qualify for a VA Loan with High DTI?
Yes, you can! The Department of Veterans Affairs (VA) itself does not have a maximum DTI requirement. So why do some lenders say no when your DTI is high? The answer: lender overlays.
Lender overlays are extra rules that individual lenders add on top of the VA’s guidelines. Many lenders have overlays that set a DTI cap at around 41% to 43%, but that’s their choice—not the VA’s requirement. If your lender turns you down because of a high DTI, it’s not the end of the road.
At Non-QM Mortgage Lenders, we have no overlays on VA loans. That means we follow the VA’s guidelines, not extra rules that make it harder to qualify. We’ve helped veterans with DTIs as high as 59% get approved for a mortgage.
What Are VA Loan DTI Requirements?
While the VA doesn’t set a maximum DTI, residual income is a related requirement. Residual income is the money left over after paying your monthly bills. Think of it as the money you use for groceries, gas, and other living expenses.
The VA uses residual income to ensure you have enough money to support your lifestyle after paying your mortgage and other debts. The residual income you need depends on your family size and where you live.
For example, in the South, a family of four would need $1,003 in monthly residual income to qualify for a VA loan, while the requirement in the Northeast for the same family would be $1,158.
How to Get Approved for a VA Loan with High DTI in 2024
While there is no strict DTI cap, certain factors can improve your likelihood of approval with a high DTI.
- Strong credit history—If you have a higher DTI, lenders will want a solid credit history. While the VA doesn’t require a minimum credit score, many lenders (especially those with overlays) do. At Non-QM Mortgage Lenders, we don’t have credit score overlays, and we’ve approved veterans with scores as low as 580.
- Residual income—As mentioned, the VA uses residual income to determine eligibility. Make sure you meet the residual income requirements for your region and family size.
- Automated Underwriting System (AUS) approval— When you apply for a VA loan, lenders run your information through the Automated Underwriting System (AUS). If the AUS approves, many lenders (including us) will follow that recommendation—even with a high DTI.
- Compensating factors—Lenders might also consider compensating factors to offset your high DTI. These include having a large down payment, a lot of cash reserves, or strong job stability.
What to Do If You’re Denied a VA Loan Due to High DTI
Getting turned down by a lender because of a high DTI can be frustrating, but don’t give up. Remember, just because one lender says no doesn’t mean you can’t qualify elsewhere.
Here’s what to do next:
- Shop around – Not all lenders are the same. Some have overlays, and some don’t. If your DTI is higher than what your current lender allows, shop around for one that follows the VA’s guidelines without adding overlays. Non-QM Mortgage Lenders is one such option.
- Ask about AUS approval – Make sure your lender is willing to approve loans based on AUS findings. If the AUS approves your loan, you could still qualify even if your DTI is high.
- Improve your residual income – If your DTI is high, work on boosting your residual income by paying off small debts or increasing your income.
- Work with Non-QM Mortgage Lenders – We specialize in helping veterans who other lenders have turned down. If you meet the VA’s basic eligibility requirements, we can work with you to find a solution that fits your situation.
VA Loan Benefits for Veterans with High DTI
Here’s why VA loans are still your best bet in 2024, even if your DTI is high:
- No down payment – VA loans allow you to buy a home with zero down, even if your DTI is high.
- No mortgage insurance – Unlike FHA loans, VA loans don’t require monthly mortgage insurance. This saves you hundreds of dollars a month.
- Lenient credit requirements – VA loans don’t have a minimum credit score, and we at Non-QM Mortgage Lenders have no credit score overlays.
- Low-interest rates – VA loans usually come with reduced interest rates compared to other types of loans, which makes them more cost-effective, even if your DTI is higher.
VA Loan Eligibility in 2024
To qualify for a VA loan, you need to meet these basic eligibility requirements:
- Service requirements – You must have been in the U.S. military on active duty, in the National Guard, or the Reserves.
- Certificate of Eligibility (COE) – You must have a COE, which confirms that you satisfy the service criteria for a VA loan.
- Honorable discharge – Most veterans need to have been honorably discharged to qualify, though some exceptions apply.
If you’re unsure about your eligibility, we can help you get your COE and determine if you qualify for a VA loan.
Special Considerations for VA Loans After Bankruptcy or Foreclosure
You are still eligible for a VA loan if you have faced financial challenges such as bankruptcy or foreclosure. Here’s what you need to do:
- Chapter 7 Bankruptcy – After a Chapter 7 bankruptcy discharge, you must wait two years to qualify for a VA loan.
- Chapter 13 Bankruptcy – With court approval, you may be eligible for a VA loan after one year of your repayment plan, and no waiting period is required after discharge.
- Foreclosure – There’s a two-year waiting period after a foreclosure, deed-in-lieu of foreclosure, or short sale to qualify for a VA loan.
Get Approved for a VA Loan with High DTI in 2024
Even if other lenders have turned you down due to high DTI, you still have options. VA loans are created to assist veterans, and Non-QM Mortgage Lenders is committed to ensuring the process is as seamless as possible—no additional requirements or unnecessary obstacles.
We specialize in helping veterans with high DTI get approved, and we can guide you every step of the way. Don’t let lender overlays stand between you and your dream home. Contact us today, and let’s get started on your path to homeownership.
Ready to Get Approved?
Call us at 800-900-8569 or email us at gcho@gustancho.com to get started today. Our team is available evenings, weekends, and holidays, so we’re here when you need us.
Frequently Asked Questions About VA Loans With High DTI:
Q: Can I Still Qualify for a VA Loan with High DTI in 2024?
A: Even with a high DTI, it is possible to be eligible for a VA loan. While the VA does not establish a specific maximum DTI, individual lenders might impose their guidelines. If a lender declines your application, some alternative lenders do not enforce such additional regulations.
Q: What is Considered a High DTI for a VA Loan?
A: A high DTI usually means your debt payments take up a significant portion of your income. Many lenders cap DTI at around 41%-43%, but VA loans are more flexible, and some lenders, like Non-QM Mortgage Lenders, allow higher DTIs.
Q: How Does High DTI Affect My Chances of Getting a VA Loan?
A: Lenders might be more cautious with high DTI borrowers. However, the VA loan with high DTI is still possible if you meet other requirements like strong residual income or good credit history.
Q: Can I Get a VA Loan with High DTI if My Lender Says No?
A: Yes! If one lender says no, it doesn’t mean you’re out of options. Some lenders, like Non-QM Mortgage Lenders, specialize in helping borrowers get a VA loan with high DTI by not adding extra restrictions.
Q: What are My Options if I am Denied a VA Loan Due to High DTI?
A: If you are denied a VA loan with high DTI, you can shop around for lenders that don’t have strict DTI rules. Consider improving your residual income or working with lenders that use Automated Underwriting System (AUS) approvals.
Q: What Compensating Factors Help You Get a VA Loan with High DTI?
A: Compensating factors like a large down payment, extra savings (cash reserves), or stable employment can help offset a high DTI when applying for a VA loan with high DTI.
Q: How Do I Increase My Chances of Approval for a VA Loan with High DTI?
A: Improving your credit score, increasing your residual income, and working with lenders who don’t have strict DTI caps will increase your chances of approval for a VA loan with high DTI.
Q: Do All Lenders Allow High DTI for VA Loans?
A: No, not all lenders allow high DTI for VA loans. Some add their own limits (called overlays), but lenders like Non-QM Mortgage Lenders follow the VA’s flexible guidelines and don’t have those limits.
Q: Does Having a High DTI Mean I Need a Larger Down Payment for a VA Loan?
A: Not necessarily. VA loans don’t require a down payment, even if you have a high DTI, but having a large down payment could improve your chances of approval with some lenders.
Q: Is a VA Loan With High DTI Better Than Other Loan Types?
A: VA loans with high DTI are generally more advantageous than other loans as they do not necessitate a down payment or mortgage insurance. Additionally, they frequently provide lower interest rates, which makes them an excellent choice for veterans.