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Unformatted text preview: 4 7.689135 7.777897 7.867004 7.956449 8.046226 8.136330 8.226754 8.317494 8.408542 8.499894 8.591544 8.683486 8.775716 8.868226 8.961013 9.054070 9.147393 9.240976 9.334814 9.428901 9.523234 9.617806 9.712614 9.807651 9.902914 9.998398 10.094097 10.190008 10.286126 10.382446 10.478964 10.575676 10.672578 10.769664 10.866932 10.964377 DEPARTMENT OF VETERANS AFFAIRS (DVA)
The income ratio is determined by taking the monthly housing expenses–principal, interest, property taxes, insurance, and long–term debts–and dividing this by net take–
Dynasty School (www.dynastySchool.com) 13-29 REAL ESTATE FINANCE
home pay. If this ratio is 41% or less, the borrowers qualify. If the ratio is above 41%, then the DVA underwriter must look at other things such as an above–average income under the cash flow approach, a high net worth, or a large down payment. DVA allows back–end ratio 41% ratios because it includes items other than those used by conventional lenders.
DVA administrators stress that DVA underwriting standards are guidelines and that they are willing to review individual veteran borrowers who do not automatically qualify, similar to the compensating factors considered by FHA. Examples of compensating factors include larger than normal down payment, insignificant use of credit cards, no vehicle payments, substantial net worth, and stable work experience and history. DVA uses the tightest qualifying standards in lending due to the lack of initial equity. CAL–VET
The qualifying procedure used by Cal–Vet is as follows: From gross income, subtract federal and state income taxes and Social Security to arrive at adjusted gross income. Housing expense is arrived at by adding principal, interest, taxes, property and disability insurance, maintenance, and utilities. Next long–term debts, which are any debts that will take longer than one year to pay off, are totaled and subtracted. The remaining income is then divided by adjusted gross income to determine the relationship between that...
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- Spring '10