How to Use a VA Mortgage Affordability Calculator - My Perfect Mortgage (2024)

In general, buying a home requires a lot of cash, which can make homeownership difficult for many.

However, for those qualified to use the VA loans because of their military service, owning a home with little or no cash is possible as a down payment through the VA program.

VA loans were created in 1944 to thank the returnees from World War II and help them acquire new houses.

Sponsored by the US Department of Veteran Affairs, these loans can be used to build, refinance, buy, or renovate an old house or condo.

The VA loan consists of relatively easy rules to fulfill before qualifying.

Sponsored

Benefits:

  • Lend in all 50 states
  • Veteran lending specialist available to you, no matter where you are
  • In-house processing and underwriting
  • Express Loan Approval program, which allows you to be done with the whole process (minus the contract and appraisal), so you can focus on finding your home.
  • Rate Protect (Lock & Shop) lock in your rate before you even find a home!

Your rate and terms may vary based on credit, income, and other factors.

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What are the requirements for a VA loan?

Before determining if you can afford a VA loan, consider the requirements to qualify.

1. You must be an eligible veteran or service member

Current service members in the Army, Navy, Air Force, Marine Corps, National Guard, or Reserve Corps must have served for at least 90 consecutive days. The minimum time served to qualify for veterans will depend on when they served.

Confirm your minimum required service time on the VA website.

U.S. Army veterans honorably discharged and met the minimum service requirements of 90 consecutive days during an active wartime period or at least 181 consecutive days of active service during peacetime can also qualify.

Surviving spouses of service members can qualify for a VA loan if their partner passes away during active service or becomes incapacitated due to a service-related disability.

2. You must meet the minimum financial requirements

Although the VA does not require a specific credit score minimum, the lender may have their set requirements to qualify.

Lender requirements often include:

  • Credit score is usually 620 or higher
  • Debt-to-income ratio 41% or less

Since the VA will back a portion of the loan in the case of default, lenders can afford to be more lenient in their approvals.

Private VA-approved lenders may have additional requirements. Confirm everything needed with the lender before you begin the process.

3. You must meet the minimum property and occupancy requirements

VA loans are meant to be used to purchase or renovate a house that will serve as your primary address and place of residence.

4. You must have the proper documentation

  1. 1-2 years of consistent employment history.
  2. VA Certificate of Eligibility (COE)

How to use a VA loan affordability calculator

Need help determining how much house you can comfortably afford with a VA loan? A VA loan affordability calculator can help! Here’s a step-by-step guide:

  1. Income: Enter your annual income before taxes. If you’re self-employed, calculate the average of your income over the past two years. This figure gives the calculator an idea of your overall earning capacity.
  2. Debt: Input the monthly amount you pay for debts such as car payments, credit card minimums, or student loans. This helps the calculator assess your existing financial obligations.
  3. Down payment: Enter the down payment amount you plan to make. This is the initial payment you will contribute towards the home purchase. If you intend to put down zero, leave this field blank or enter “0”.
  4. Credit score: Specify your credit score based on the provided ranges, which are excellent (720+), good (660-719), fair (620-659), or poor (below 620). Your credit score plays a role in determining the interest rate for which you may qualify.
  5. Interest rate: Enter the estimated interest rate for the VA loan. Consult with a VA-approved lender for a more accurate estimate based on your circ*mstances.
  6. Loan term: Select the desired loan term from the options—30 or 15 years. The loan term affects the duration of your mortgage and can impact your monthly payments.
  7. Military branch: Include any additional options related to military service. Choose the appropriate military type based on your service status: regular military, reserves, national guard, or surviving spouse.
  8. Property tax rate: Property taxes are generally estimated to be around 1.2% of the home’s value, but they can vary depending on your location. Consult with a loan officer or research local property tax rates for an accurate estimate.
  9. Annual homeowners’ insurance rate: Typically, homeowners insurance is estimated to be around 0.35% of the home’s value. However, this rate can vary based on the insurance provider and other factors. Consult with insurance providers or research average rates in your area to get a more precise figure.
  10. Review: Review the results provided by the calculator. It will estimate the loan amount you may qualify for and provide details on the estimated monthly payment. This information gives you an idea of the affordability range for your home purchase.
  11. Adjust as needed: Consider adjusting the inputs to explore different loan scenarios. You can modify variables such as the down payment amount, credit score, loan term, interest rate, property tax rate, or homeowners insurance rate. By adjusting these variables, you can assess how changes in each factor affect your affordability and monthly payment.
  12. Make a plan: Once you estimate the cost of your VA mortgage, you can make an action plan to improve your finances or go straight to your preferred lender to start the process.

Remember that while the VA loan affordability calculator is useful, it’s only an estimate.

It’s always recommended to consult with a mortgage professional or VA-approved lender for a more accurate assessment and to explore your loan options further.

Our advise is based on experience in the mortgage industry and we are dedicated to helping you achieve your goal of owning a home. We may receive compensation from partner banks when you view mortgage rates listed on our website.

How to Use a VA Mortgage Affordability Calculator - My Perfect Mortgage (2024)

FAQs

How do I calculate my affordability mortgage? ›

Using a percentage of your income can help determine how much house you can afford. For example, the 28/36 rule may help you decide how much to spend on a home. The rule states that your mortgage should be no more than 28 percent of your total monthly gross income and no more than 36 percent of your total debt.

How much do I need to make to buy a $400k house with VA loan? ›

Your payment should not be more than 28%. of your total gross monthly income. That means you'll need to make 11,500 dollars a month, or 138 k per year. in order to comfortably afford this 400,000 dollar home.

How much house can I afford if I make $36,000 a year? ›

On a salary of $36,000 per year, you can afford a house priced around $100,000-$110,000 with a monthly payment of just over $1,000. This assumes you have no other debts you're paying off, but also that you haven't been able to save much for a down payment.

How much money do you need to make to qualify for a $400000 mortgage? ›

The annual salary needed to afford a $400,000 home is about $127,000. Over the past few years, prospective homeowners have chased a moving target: homeownership. The median sales price of houses sold in the U.S. stood at $417,700 in the fourth quarter of 2023—down from a peak of $479,500 in Q4 2022.

How much income to afford a $500,000 mortgage? ›

Since many lenders don't want more than 28% of a person's income to go toward their mortgage debt, borrowers will generally need an annual combined household income of at least $120,000 to buy a $500,000 house.

What is the equation for home affordability? ›

Most financial advisors recommend spending no more than 25% to 28% of your monthly income on housing costs. Add up your total household income and multiply it by . 28. At most, you may be able to afford a $1,120 monthly mortgage payment.

What is the minimum down payment for a VA loan on a $75000 home? ›

While VA doesn't require a credit score or down payment for the VA home loan, the amount a lender will lend you may be based on individual borrower characteristics such as credit, cash on hand, down payments, and other factors. Borrowers should shop around for a loan product that best suits their financial needs.

How much income do you need to qualify for a $300,000 mortgage? ›

How much do I need to make to buy a $300K house? To purchase a $300K house, you may need to make between $50,000 and $74,500 a year. This is a rule of thumb, and the specific annual salary will vary depending on your credit score, debt-to-income ratio, type of home loan, loan term, and mortgage rate.

How much house can I afford if I make $70,000 a year? ›

The home price you can afford depends on your specific financial situation—your down payment, existing debts, and mortgage rate all play a role. Most experts recommend spending 25% to 36% of your gross monthly income on housing. For a $70,000 salary, that's a mortgage payment between roughly $1,450 and $2,100.

Can someone who makes 40k a year afford a house? ›

How much house can I afford with 40,000 a year? With a $40,000 annual salary, you should be able to afford a home that is between $100,000 and $160,000. The final amount that a bank is willing to offer will depend on your financial history and current credit score.

Can a single person live on $36,000 a year? ›

If you want to have a minimalist lifestyle, 36k/year is more then enough. If you want a home, family, car, insurance and some "toys", it's not going to be enough, at least in a majority of places in the U.S. But again, the term "decent" is pretty objective.

Can I buy a home making 36k a year? ›

If you make $3,000 a month ($36,000 a year), your DTI with an FHA loan should be no more than $1,290 ($3,000 x 0.43) — which means you can afford a house with a monthly payment that is no more than $900 ($3,000 x 0.31). FHA loans typically allow for a lower down payment and credit score if certain requirements are met.

What is the minimum income for a 200K mortgage? ›

To be approved for a $200,000 mortgage with a minimum down payment of 3.5 percent, you will need an approximate income of $62,000 annually.

What is the monthly payment on a 300K mortgage? ›

How much is a monthly payment on a 300K house? The monthly payment on a $300K house will range from $1,850 to $2,585. Your monthly payment depends on what state you're buying in, your interest rate, your down payment, homeowner's insurance, and other factors.

How much do I need to make to buy a $300K house with an FHA loan? ›

How much do I need to make to buy a $300K house? You'll likely need to make about $75,000 a year to buy a $300K house. This is an estimate, but, as a rule of thumb, with a 3 percent down payment on a conventional 30-year mortgage at 7 percent, your monthly mortgage payment will be around $2,250.

What is the formula for affordability ratio? ›

The 28/36 Rule is a commonly accepted guideline used in the U.S. and Canada to determine each household's risk for conventional loans. It states that a household should spend no more than 28% of its gross monthly income on the front-end debt and no more than 36% of its gross monthly income on the back-end debt.

How do you calculate loan affordability? ›

The 28/36 rule is an easy mortgage affordability rule of thumb. According to the rule, you should spend no more than 28% of your pre-tax income on your mortgage payment and no more than 36% toward total debt obligations. Your mortgage, car payment, credit cards and student loans all count as debt.

What is the affordability rule for a home mortgage? ›

Lenders call this the “front-end” ratio. In other words, if your monthly gross income is $10,000 or $120,000 annually, your mortgage payment should be $2,800 or less. Lenders usually require housing expenses plus long-term debt to less than or equal to 33% or 36% of monthly gross income.

What is a good affordability score for a mortgage? ›

Well, as a rule of thumb to be accepted by almost all lenders you would need to have a DTI of 30% or less. Up to 40% and you may not be offered the highest income multipliers available. With a DTI of 50% or more, lenders consider you to be a high-risk borrower.

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