For VA loans, what are the qualifying HER and TOR?

For VA loans, what are the qualifying HER and TOR?

• A. Her: 28%, TOR: 36%
• B. Her: not applicable, TOR: 41%
• C. Her: 31%, TOR: 43%
• D. Her: not applicable, TOR: 31%

Answer: (B)

In VA loan underwriting, there isn’t a formal front-end housing expense ratio used as a strict qualification cut-off. Instead, lenders focus on the total obligations ratio and the borrower’s residual income. The total obligations ratio is typically limited to about forty-one percent of gross monthly income, and residual income is also considered to ensure the borrower can cover living expenses beyond debt payments. That’s why the option stating that the front-end housing ratio isn’t applicable and the TOR is about forty-one percent is the best fit.

In VA loan underwriting, there isn’t a formal front-end housing expense ratio used as a strict qualification cut-off. Instead, lenders focus on the total obligations ratio and the borrower’s residual income. The total obligations ratio is typically limited to about forty-one percent of gross monthly income, and residual income is also considered to ensure the borrower can cover living expenses beyond debt payments. That’s why the option stating that the front-end housing ratio isn’t applicable and the TOR is about forty-one percent is the best fit.