Buying a home is an exciting milestone in life. Determining your budget and how much house you can afford is one of the first steps to take when preparing for homeownership.
As a military service member, veteran or surviving spouse, you may qualify for a VA home loan, which offers benefits like no down payment and limited closing costs. With a VA loan, you want to make sure you borrow only what you can reasonably afford. Use VA loan affordability calculators to help determine your price range.
In this comprehensive guide, we’ll explain what factors affect how much home you can afford with a VA mortgage You’ll also learn how VA affordability calculators work so you can confidently set your home buying budget
What Impacts How Much House You Can Afford?
When getting a VA-backed loan, there are a few key factors that determine how much you can afford:
Income
Your income is the driving factor in what you can afford. Lenders want to see stable, reliable income that’s likely to continue. For VA loans, countable income usually includes:
- Salary
- Spouse’s salary
- Pension
- Disability payments
- Bonuses
- Retirement pay
- Interest/dividends
- Part-time job pay
Bring 2 years of W2s recent pay stubs, and proof of any other income to help verify what you make. If self-employed you may need additional tax docs.
Debt-to-Income Ratio
Also called DTI, this ratio compares your total monthly debts to your gross monthly income. VA guidelines say your DTI should be 41% or lower. The lower your DTI, the more comfortable your budget.
To calculate your DTI
Monthly debts ÷ Gross monthly income x 100 = DTI%
Debts include:
- Housing costs (rent/mortgage)
- Credit card payments
- Student loan payments
- Auto loans
- Personal loans
- Child support
Credit Score
The VA doesn’t require a minimum credit score. But the higher your score, the better mortgage terms you’ll likely get.
Many lenders look for a credit score of at least 620 on VA loans. If your score is lower, you may pay higher interest rates or fees. Maintaining good credit helps keep costs down.
Down Payment
VA loans don’t require a down payment. But if you can afford one, it helps lower your loan amount and monthly payment. Putting 10% down also eliminates the VA funding fee.
Even a small down payment of 3-5% makes a difference. Work within your budget and save what you can.
Location
If you need Remaining Entitlement for your VA loan, the county loan limit where you buy determines your max loan amount before needing a down payment. High-cost areas have higher limits.
Buy in a lower-priced neighborhood or more affordable metro to stretch your budget further. Just be sure the home and location meet your needs.
How VA Affordability Calculators Work
VA affordability calculators help estimate how much you can borrow based on your income, debts, credit and other factors. Here’s how they make the calculations:
Collect Your Financial Information
You’ll input details on:
- Gross annual income
- Monthly debts/expenses
- Down payment amount
- Credit score
- Property location
Any spouse’s income is also included. Gather pay stubs, statements, credit report, etc. to have all the data needed.
Determine Maximum Loan Amount
Based on your income, debts, credit score and down payment, the calculator estimates the maximum loan amount you can qualify for. This is based on keeping your front-end DTI around 28% and total DTI under 41%.
Front-end DTI:
Housing costs ÷ Gross monthly income
Total DTI:
Monthly debts ÷ Gross monthly income
A lower DTI gives you more wiggle room in your budget. You may qualify for more, but a lower loan amount costs less per month.
Factor in Loan Terms
You choose the loan term/type — 30-year fixed, 15-year fixed, ARM, etc. Shorter terms have higher monthly payments but save on interest over the life of the loan.
Interest rate also impacts monthly costs. The calculator uses today’s average rates to estimate payment. Your actual rate depends on your credit.
Estimate Maximum Home Price
Using your personalized loan amount, projected interest rate and loan term, the calculator estimates the maximum home purchase price you can afford while keeping payments comfortable.
You can adjust the down payment, loan type and other factors to compare scenarios and price ranges. Always stay within your budget.
Review Monthly Payment Breakdown
Look at the mortgage payment breakdown. It estimates:
- Principal/interest payment
- Property taxes
- Homeowners insurance
See how taxes and insurance impact total costs. You want your monthly housing expenses to fit your budget.
Get Preapproved for Accuracy
For the most accurate affordability estimate, talk to a lender and get preapproved. Preapproval considers your specific financial situation. It also locks in an interest rate and shows sellers you’re serious.
Ask for a preapproval letter detailing the loan amount, so you know exactly what you can afford. Shop within that budget.
Tips for Using VA Affordability Calculators
When using VA loan affordability calculators, keep these tips in mind:
-
Be honest about your income and debts — overestimating income or underestimating debts skews your budget
-
Input your actual credit score if you know it, not an estimate
-
Get quotes on home insurance and property taxes for accuracy
-
Avoid maxing out your qualified loan amount — go below it for financial breathing room
-
Adjust down payment, loan term and other factors to find your optimal budget
-
Get preapproved with a lender to confirm the calculator’s estimate
-
Only buy a home you love that fits your preapproval amount
Sample VA Affordability Calculator Results
Let’s look at a sample scenario to see what kind of information VA affordability calculators provide.
Tom is a veteran who makes $60,000 a year. His monthly debts like car and student loan payments total $800. He has a credit score of 700 and $10,000 for a down payment.
He lives in a metro area with a VA county limit of $650,000. Using a VA affordability calculator, here are his results:
Max Loan Amount: $335,000
Max Home Price: $345,000
Monthly Payment:
- Principal/Interest – $1,650
- Taxes – $250
- Insurance – $100
Total Monthly Payment: $2,000
This gives Tom an idea of how much he can comfortably afford. He plans to get preapproved for a specific loan amount before shopping.
Find the Right Home Within Your Budget
VA affordability calculators help you estimate the price range you can afford when buying a home with a VA loan. Make sure to get preapproved and shop below the preapproval amount.
Also look for ways to lower costs like:
- Improving your credit
- Putting more down
- Buying below your limit
- Shopping VA loan rates
Owning a home is an attainable goal with a VA loan. Take time to determine your affordable price range. A mortgage calculator can show monthly costs at different prices.
Buying a home that comfortably fits your budget allows you to make monthly payments on time. Use VA affordability tools to set realistic expectations and start your home search off right. You’ve earned this dream!
How to use Credit Karma’s mortgage calculator for a VA loan
If you’re in the market for a new home, Credit Karma’s VA mortgage calculator can help you estimate your monthly mortgage payments. Below is a list of the information you must provide to get an estimate.
Keep in mind these may not be all the costs you have to pay when buying a home. You may be responsible for additional expenses, including discount points, origination and lender fees, and closing costs for things like appraisals and title insurance.
Property tax amount (annually)
When you buy a home, you have to pay taxes on the property each year. You can often find tax information in a house’s for-sale listing, or you can check with the county tax assessor’s office. Enter the approximate annual dollar amount in this field.
HOW MUCH HOME CAN I AFFORD?
FAQ
How much will a VA loan approve me for?
|
State:
|
Loan Limits Starting At:
|
Link:
|
|
Alaska
|
$510,400
|
See all Alaska loan limits >>
|
|
Arizona
|
$510,400
|
See all Arizona loan limits >>
|
|
Arkansas
|
$510,400
|
See all Arkansas loan limits >>
|
|
California
|
$510,400
|
See all California loan limits >>
|
How much do I need to make to buy a $400k house with VA loan?
How much house can I afford as a veteran?
How much should you put down on a house with a VA loan?
What if a VA loan has a higher monthly payment?
If the calculator estimates a higher monthly VA mortgage payment than you would like, you can: Extend the loan term. If you selected a 15-year term at first, try a 30-year term. A 30-year fixed-rate mortgage will have a lower monthly payment than a 15-year fixed-rate mortgage, but you’ll pay more interest over the life of the loan.
How much does a VA loan cost if a down payment is 5%?
For a first-time VA purchase loan with a 5% down payment, the funding fee is **1.5%** of the loan amount .For example, if you’re buying a $200,000 home with a 5% down payment, the funding fee would be
How do I calculate my VA home loan payment?
Use our VA home loan calculator to estimate your monthly mortgage payment with taxes and insurance. Simply enter the purchase price of the home, your down payment and details about the loan to calculate your VA loan payment breakdown, schedule and more.
How much home can I afford with a VA loan?
To calculate how much home you can afford with a VA loan, VA lenders will assess your debt-to-income ratio (DTI). DTI ratio reflects the relationship between your gross monthly income and major monthly debts. Our calculator uses the information you provide about your income and expenses to assess your DTI ratio.