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If you served in the armed forces, and you are elidable based on your service to apply for a Veteran's Administration (VA) home loan, you want to make sure you are financially ready before you submit your application. Like all home loans, the VA loan has specific requirements to be approved for a loan beyond your service record.

Step #1: Secure Reliable Income

Just like with a regular home loan, when you apply for a VA loan, they will want to see that you have a reliable income. Ideally, you are going to want to be able to show that you have held down the same job for two years. Although that is not a requirement set in stone, showing that you have steady employment and a steady income to pay a mortgage is essential.

Step #2: Establish a Low Debt-to-Income (DTI) Ratio

The VA wants to see that you have a low debt-to-income ratio. Your DTI ratio is a comparison of the payments that you make towards your debt every month versus your gross income.

For example, if you currently pay $400 in credit card payments a month, $800 in student loans, and $200 for a car payment, you would have debt payments of $1,400 a month. That would be dived by your gross monthly income, which is your income, before all the taxes and withholds are removed from your paycheck.

So, if your gross income was $5,000, with $1,400 in debt payments, you would have a 28% debt to income ratio. Ideally, you want to keep your DTI below 40% for the best chances of securing a VA loan. If your DTI is higher, you will want to pay off some of your debts before applying for a VA loan.

For example, if you paid off your credit card payments, you would only have $1,000 in debt payments, which would bring your DTI with an income of $5,000 down to 20%.

Step #3: Check Your Credit History

Your credit history is essential when applying for a VA loan. Check your credit report and see what your score is. Ensure all the information on your report is correct; if not, you can work to correct the information, which can take a while.

A higher score will allow you to secure better loan terms. If your score is on the lower side, see what you can do to increase your score, such as making loan payments on time and paying down debt.

Before applying for a VA loan, you want to make sure you are in a position to get approved and get the most favorable loan terms possible. You can do this by holding a steady job, reducing your debt-to-income ratio, and making sure your credit score is as good as possible.

Contact a company like Lund Mortgage Team for more information.