Are you’re asking yourself, how much mortgage can I afford? If you answered yes, you’ll want to know that SoCal VA Homes offers Southern California VA loans programs, a VA mortgage calculator and tips for buying your home. Since we specialize in Veterans first mortgage loans, we want to help you through the somewhat nerve-wracking process of purchasing a house. Whether you’re buying your first or fifth home, the home buying process doesn’t have to be a difficult thing, especially if you know who to turn to when getting a veteran mortgage loan.
Factors That Affect a Veteran Mortgage Loan
In terms of what you can afford, you’ll want to know exactly what factors affect how much you can borrow. Four key factors determine how much you can borrow on a mortgage: household income, monthly expenses, credit score, and how much you have set aside in savings.
#1. Household Income
Generally speaking, the higher your monthly income is, the more you can afford in monthly mortgage payments. Monthly expenses and debt payments are weighed against your income to see just how much you really have available for mortgage payments. Monthly payments are divided by monthly gross income, resulting in a measurement also called the debt-to-income ratio. There are two ways lenders use the metric: the front-end ratio and back-end ratio.
#2. Monthly Expenses
Front-end ratios are calculated by dividing the total housing costs by gross income. To reiterate, only housing costs are included. Back-end ratios, on the other hand, adds up all major existing debt plus housing expenses and divides that sum by gross income. VA lenders ignore front-end ratios and only use the back-end ratio. So, if you’re a Veteran and plan to use your VA home loan benefits, only your back-end ratio will be looked at closely.
#3. Credit Score
Credit score is a significant factor for most lenders. If you have been reading about VA home loans, you will know that credit score is only one of several factors VA lenders use to create a big picture of your finances. A credit score measures the level of risk you pose based on your financial history and past debts. A lender will feel much more confident about giving you a mortgage if your credit score is strong. A strong credit score can also mean being able to borrow a higher mortgage amount.
Finally, lenders will check your savings for several different reasons. They will want to know that you have the reserves to continue to make monthly mortgage payments if your income was to fluctuate and dip. Your savings will also inform the lender about whether you can cover the costs of a down payment, if a down payment is required, and to see if you can afford closing costs.
For our Veteran home buyers, an advantage to using your VA loan is that VA lenders don’t typically require any savings in reserve, as is the case with conventional loans.
Monthly Payments? Use a VA Mortgage Calculator!
Are you wondering what kind of payment you can be responsible for on a monthly basis? To determine a very conservative mortgage payment, first, multiply your monthly take-home household income by 25%. This will give you a rough estimate of your maximum mortgage payment. However, you will also want to factor in property taxes and homeowners' insurance. Calculating a future mortgage is important because it simplifies real estate decisions and gives you a very concrete, clear picture. To make things easier, get an estimate of your monthly home payments by using our VA mortgage loan calculator.
Finally, don’t leave any loose ends. Be sure to factor in future monthly expenses such as homeowner association fees, utilities, regular repairs, and maintenance.
SoCal VA Homes Can Help with Your Veteran Mortgage Loan
Get a VA home loan through SoCal VA Homes! SoCal VA Homes has the knowledge base and industry contacts to determine if you are eligible to apply for a VA home loan, and to help you estimate how much mortgage you can afford. We can also talk in-depth with you about Veteran mortgage rates.
After serving and sacrificing for your country, you deserve benefits like a VA home loan. We want to make sure the process of using those benefits goes as smoothly as possible. So we developed three Veteran mortgage loan programs that have proven to make this possible for you and your family!
Contact Us Today!
Our blog contains more information about the home buying process. Contact SoCal VA Homes if you’re ready to pursue buying your first home. Ready to browse? You can visit our VA homes for sale in California page or through our full list of areas. VA approved homes for sale. Give us a call today at (949) 268-7742. We look forward to talking more about using your VA home loan benefits to buy your first home!