This is a question I get often and it is a legit question for someone looking to buy a home. The answer is quite simple. I am going to keep this with the “textbook answers”. Let me break it down Army style (KISS method). I will be picking on Army Vets today. So the textbook answer is you can typically qualify for a total debt load of 45% of your income. On VA loans, you can actually qualify for more than 45% in most cases but the textbook answer is 45%.
As far as your housing expenses go, they say it is good to keep your housing payment at 25% of your household income. That way you can still afford the rest of life.
So the answer on how much house you can afford on a VA loan really depends on your income and your current debt load.
A lender will take your total income (more about calculating income here) and divide it by you total debt that shows up on your credit report plus a new house. You will include any additional debts like child support or alimony (again for you Army guys). So here is a simple example that even infantry could understand:
Total monthly debts shown on credit report: $500
New proposed house payment $2,000 (roughly $425k in todays market)
Total proposed payments: $2,500
W2 job: $5,000
VA service connected disability $1,000
Total income $6,000
Total Debts $2,500 % Income $6,000 = 42%. This scenario shouldnt have any issues qualifying as long as everything else lines up.
Now this is super simplified and you may have additional questions. If you are in TN or FL, you call me. If you are in another state that we are not licensed in, call your local mortgage broker or visit www.brokersarebetter.com or www.vettedva.com to find a certified VA Loan Specialist.