If you’re applying for a standard mortgage loan, the lender doesn’t take into account the costs of your monthly utility and maintenance costs when deciding if you qualify. That’s not the case with VA loans. Even though including utility and maintenance for your VA loan is an extra step you don’t have to take with conventional lenders, there’s a good argument for the requirement. Even though veterans generally can purchase a home without a down payment, the foreclosure rates on homes purchased with VA loans is very low. The VA goes the extra mile to ensure veterans really can afford the home of their choice.
To figure out the maintenance and utility costs of the home you wish to buy, document the dwelling’s square footage. You can find that information on the property tax assessment for the property or your appraisal. Make sure the documents include the heated and unheated areas of the house. The latter may include the garage, attic, sunroom or an unfinished basement. Heated areas are those included in traditional living space, including the bathrooms. The VA uses the total square footage in its maintenance and utility calculations.
The Standard Rate
The standard rate for the VA is 14-cents-per-square-foot. Calculate the maintenance and utility costs by multiplying the home’s total square footage by 0.14 percent, which gives you that number for the VA’s loan analysis.
VA Loan Analysis
The maintenance and utility costs are included in the VA’s loan analysis form. Other estimated costs needed for the loan analysis include the mortgage payment, property taxes, hazard insurance, special assessments and any other fees, such as those of a homeowner’s association. The applicant must include the loan amount and down payment, as well as their current monthly housing expenses. Other loan application information includes all sources of monthly income and liquid assets, as well as outstanding debts. The veteran must include net take-home pay, less the amount of income needed monthly for shelter. The balance is what is left over each month for family support and is known as residual income. The VA wants to ensure that veterans do not stretch themselves too thin when making a home purchase making sure they have sufficient income left over for expenses like food, clothing, gasoline and other necessities. Because home prices vary so much according to the region, this is taken into account when the VA conducts the loan analysis. For example, a veteran looking to buy a home in the West may not qualify for a loan based on the analysis, but someone with the same income may find themselves approved to buy a home in the lower-priced South.
- Depending on when you enlisted in the military and whether you were on active duty, you may be required to serve 18 months to six years to be eligible for the VA loan. Surviving spouses who have not remarried may also be eligible. Contact your local VA office for details and eligibility certificates.
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