Quite simply, a borrower’s DTI ratio calculates the borrower’s monthly debt versus his or her gross monthly income. It’s anticipated and ordinary to have some level of debt. Unlike with other kinds of mortgages, to VA home loan lenders, only one type of DTI ratio is important. This ratio includes your monthly debts such as housing costs, recurring debts and other outstanding payments.
As noted, conventional, FHA and USDA home loan lenders use two DTI ratios for borrowers. One only considers expenses for housing. This is typically called the front-end ratio. The other ratio includes your total of all main monthly debts and is referred to as your back-end ratio. The VA pays no attention to the front-end ratio and only considers the borrowers’ back-end DTI ratios.