Qualifying Ratios

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FLORIDA REAL ESTATE SALES ASSOCIATE COURSE

Types of mortgages

Section 38 of 72

When underwriting a VA loan, lenders look at the borrower's ability to repay using a slightly different metric than conventional or FHA loans. The VA uses a Total Obligations Ratio (TOR) benchmark of 41%. This ratio compares the borrower's total monthly debt payments (housing plus other debts) to their gross monthly income. However, the VA also heavily emphasizes "residual income"—the amount of cash the borrower has left over for family support (food, gas, clothing) after paying all major debts and taxes. A borrower with strong residual income can often be approved even if their TOR exceeds 41%.