Applying for a VA home loan is akin to applying for a credit card. When a buyer applies for a loan, they’re essentially agreeing that the lender pulls their credit report. The lender will obtain their certificate of eligibility and pull their credit score, and if they deem that the buyer has an established credit history, the higher the chances of securing the loan.

Aside from these, the buyer must also provide proof that they can afford the new monthly payments. If you’re applying for a VA home loan, you should be ready to give a copy of your federal income tax returns,  paycheck stubs, and W2 forms. However, there are times when your loan might seem out of reach. Luckily, we provided some tips to help you get the loan you want.

Learn About the Debt Ratio

Real estate investments can provide you with a reliable and steady cash flow. Investing in rental properties is relatively easy as expenses are Before we give you the tips, you need to understand the 41 debt ratio. This ratio helps VA lenders determine the affordability of your new loan. It is calculated by dividing your monthly obligations by your gross monthly income. The debt ratio has been used for years to compute the true debt to income ratio limit. 

For you to get a better idea, here is an example:

Based on the information you gave the VA lenders, your house loan repayments, monthly property tax, insurance payment, and condominium or homeowner association fees totals $3,000. Your student loans and your monthly car payment totals $700. You have a total monthly debt of $3,700. Your gross monthly income is $10,000.

To compute the debt ratio, you divide $3,700 by $10,000, which is equal to 0.37. Your debt ratio is 37, and the maximum ratio allowed is 41. So, in this scenario, you would qualify for a VA loan. However, what if you don’t? These are the tips to help improve your debt ratio. 

1. Reduce Your Loan Amount

The best way to reduce the debt ratio is to avoid borrowing money from different lenders. The bigger your debts are, the harder it will be for you to pay for all of them. So, if you need to get to 41, lower your loan amount.

What you can do is negotiate a lower sales price on the property you want to purchase. Afterward, apply for a down payment to reduce the amount of the loan. You can also look for a more affordable home. The VA has the lowest delinquency rate because of its adherence to the 41 ratio guideline, so you can expect that they will be strict about it. 

2. Ask for a Low Interest Rate

Ask for a lower rate from your VA lender. They can provide you with different interest rates with discount points you can use. Choosing a low interest rate means smaller monthly payments. 

3. Extend the Loan Term

One of the ways to reduce the debt ratio is to extend the loan term. Interest rates for shorter-term loans are lower compared to loans with longer terms, but the monthly payments are higher. This is why people who borrow for a 15-year loan often ask to extend to a 30-year term. 

For example, if a 3.50% 30-year fixed-rate loan with no points has an $898 per month payment, by paying one point, you might lower your rate to 3.25%. Pay two points, and your rate can go to 3%. 

A 3.25% rate and a 3.00% 30-year fixed-rate loan lower your principal and interest payment to $870 and $843, respectively. Sometimes when your debt ratio is just out of reach, buying down your interest rate with a discount point can get you over the hump.


The debt ratio is an essential factor in determining whether you qualify for a VA loan or not. May these tips help you achieve the debt ratio you need and obtain the loan amount you deserve. You may just get closer to purchasing a new home.

You can always buy a house near Luke AFB. To help you out, Desert Heroes Team is a group of experienced, licensed real estate agents helping military families serving Luke Air Force Base. Our team members are experts in virtual home buying, navigating financing options, including VA loans, and reducing the stress of a PCS. We’re committed to ensuring you find a home and a community. Contact our friendly customer service team.