How Much Can You Afford With 100% VA Disability?!?

How much can you purchase with a hundred percent permanent and total VA disability compensation combined with that amazing VA home loan? That's what we're covering today to include how to purchase a million dollar multifamily and have someone else pay for your mortgage. And by the way, if you guys want more investor strategies with your VA home loan to have unlimited VA home loans, drop a comment below because we'll start a group. So there's four things you need to know, uh, before we go into the examples. So you understand kind of the makeup of this entire process and how it works. So the first thing we're going to go over is how do lenders look at a hundred percent P and T income. This can also include a hundred percent TBI use. So just keep that in mind. And it's pretty straightforward. You can use all of your income right away. There's no waiting period. So if you received it today, you can instantly use that income today. Okay. And lenders will also gross that income up by 125% because that money is tax free. So you get a little bit of a bonus. So what that does for you is it gives you a lower debt to income ratio, but it's important to know that the grossed up income is going to be taken away when a lender looks at your residual income. Now I'm going to show you guys a chart right now, and I'm also going to link it in the description below. And then we're going to go through it when we go through the examples. That's why it's important to watch the video in its entire. So let's look at this here. So what you're going to see is going to be the total, the table of residual income for loans less than 79, 999. That's not going to really apply to most people that are out there because I think the medium price on a home right now is $400,000. Okay. So let's go down a little bit here. We're going to see based on where you are, that residual income piece is going to be different. Now residual income is your net income after all your expenses, which again, I'm going to give you guys some examples. So if you see here, if you're in the Midwest on a single family property, I'm not a single family, like a sole person, then you're in the Midwest. 441 is the minimum amount that you need. This is why it gets a little bit tricky because you'll see debt to income ratios of like, let's say 70% and veterans can still purchase. I think it's a little bit risky because this is not that much money to live on, on a monthly basis, which you could, you don't want to run into problems using that VA home loan, but I'll link that in the description. So you guys can pull this up. And then we'll also pull this up a little bit later. All right. Now, now that we have that cover what's also crazy is if you're purchasing in a state that allows you to waive your VA disability property taxes, because you have a VA disability you can actually qualify without those property taxes, which is pretty great. But there's a couple of things that you need to be aware of with that. Now I'm going to drop a link below and up top around when a video we did recently on how to actually search for these tax breaks, because it's really important to understand it because there's a lot of nuances. So just because the state allows it, they may have income restrictions. They may have County overlays. All of those things are going to be factors in to qualification. And if your taxes are paid in arrears, then you won't have an exemption for a period of time, which typically is going to be to the following year, which, you know, are you okay making those extra payments? Okay. Second, sell lenders need to look at your credit. Your credit is a major factor for the rate and fees. You're going to be charged. Okay. Credit is something that you control. That's why it's so important for you to budget because budgeting leads to good credit and making all your payments on time. Technically the VA doesn't have a minimum credit score, but the reality is lenders do have a minimum. And if your score is under six 20, you're paying a lot in fees. But basically that equates to discount points and higher interest rates just because the risk of default goes up significantly. If you guys want more videos on like understanding credit and how to fix it again, drop a comment below. I do this for the veteran community. The third thing, if you're married and not in a community property state, which I'm going to go over in a little bit, you don't have to factor your spouse's credit or income to qualify. So if you don't want them on there, no big deal. But if you do want them on there, just note that their income and credit is going to be added to your qualification as a regular loan. And I'll give you guys some examples of that a little bit later as well. Now, all that extra money that they make is going to add towards your qualification. Even let's say you're going through the VA disability process. You're not a hundred percent PNT yet, but you have 10% or 50%. All your spouse's income can be used. Even if they make more than you, the reason I mentioned that is when you do what's called a joint home loan application, then it starts making a difference. But when you're married, veteran can have zero income spouse, have all the income, and you can still use that beautiful VA home loan. Now, if you're in a community property state, that definitely changes things. Now that's going to include Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. So even in the, in these States, even if your spouse is not on the mortgage, the lender is still going to request a credit report from your spouse and count all the liabilities against you qualifying, unless you can prove that they can pay their own bills, which you typically are going to submit a pay stubs and tax returns. Now this is VA specific. Other loan products do not have this requirement. So again, those are, that's food for thought. When you're going into this, the fourth thing and last thing we talk about before we go into the examples is let's talk closing costs and reserves. Yes. Even if you're a hundred percent disabled, you still have to pay closing costs. The only fee that you're not going to pay is what's called the VA funding fee, right? That's a fee that VA charges in order to basically fund the entire program, which that alone can save you. I mean, tens of thousands of dollars depending on your price point. And also if you have the VA disability where you don't have to pay property taxes, same thing, then you don't have to set up the escrow accounts, but you really need to be careful of that. Now, what are reserves? Reserves is basically a savings, right? What kind of savings do you have? Which can include checking savings, money market accounts, TSP 401k, just to name a few cash in the mattress, doesn't count unless it's been in your account for the last two months. That's what lenders are going to look at two months of bank statements to be able to verify that. Now the VA doesn't require reserves, but it's a smart to have them. Uh, but I mentioned earlier purchasing a multifamily, right? So when it comes to purchasing a multifamily, you go and offsetting the mortgage payment with potential rental income. You do need six months of reserves that include the principal interest taxes and insurance and some type of any of these accounts you'll be able to use it with. And the cool thing with V loans is they actually use like a hundred percent of a retirement account to help you qualify for those reserves. Now, if you don't pay taxes, then you don't have to include that, which I think again is pretty awesome. Right? Again, in the description, this Excel sheet is going to be listed. I'm going to just quickly glance over at the residual calculator. So we can kind of get an example. So I'm going to use somebody in Illinois that has a family size of four. So the residual requirement is going to be a thousand three dollars. So let me pull this up and let me explain what all of this is. Okay. So you're going to see at the bottom, we have three tabs. Okay. We have the income liabilities tab. If you're purchasing a single family, now this will include purchasing a condo plan, new development, anything other than a multifamily. Okay. So let me show you guys what that looks like. So we're going to go through what these numbers mean. And then you have a multifamily calculator which is a little bit more complicated because we have multiple units. So let's start with the current income. And I'm going to go through again, the residual requirement piece and what all of this is back to that. So the first section up here is going to be the veteran's income. Now in this example, what I did is I used a disabled a hundred percent permanent total disabled veteran that's married with two children. So the growth, the V disability income is 4,202. Okay. I gross it up by 125%. So for debt to income purposes, I'm looking at the total grossed up income to the side of that is the residual income, which is the 4,202 because we have to remove any federal taxes, state taxes, social security and other taxes are going to be removed here. And I'm going to go over that in a second. Okay. Down below, you're going to have your liabilities, right? You have a car loan, credit card installment loan. You can add to this because you guys can download this sheet and you can kind of add your liabilities. And I'll tell you this, never disqualify yourself. We're happy to help you. There's a link in the description to schedule a call with us and we can walk you through your individual situation. Don't deny yourself because a lot of people do it and they can actually qualify. Okay. So just first example is going to be just veteran with a hundred percent disability. Okay. So now let's, so you, you factor in all your stuff here. Then you go to single family home. So we're looking at a $400,000 price point. This is, this is a number that you can change to be able to manipulate as you fit. It would change the loan amount. Why there's no additional cost to this part is because you don't have to pay the refunding fee. You put it in the interest rate, 30 year term. It automatically calculates what the payment's going to be. You have to put in insurance or if there's taxes involved, it's going to tell you how much your monthly payment is. Also something that's unique on VA home loans is that you do have to pay 14, they factor in 14 cents per square foot towards your residual requirement, which is unique again to the VA home loan. So in this case, it's going to be thousand three residual requirements. So here it's going to take in the total residual income, right? So it's going to be your net income. It's going to take the liabilities that you have of the two 25 from the first sheet, what's your new mortgage payment's going to be. And also it's going to take in the square footage factor into that, right? So here it's going to say you have 1353 in residual income and you required a thousand three and then your debt to incumbation is 54%. So in theory, this loan is doable. If you have good credit, like this is something that would be doable. Okay. But again, you got to play with the numbers to kind of massage things. Now let's look at it from this exam scenario. Uh, the 4202 and looking at purchasing a multifamily property, right? This is where things get a real interesting. Okay. So obviously the mortgage payment here, if you're exempt from property taxes, this is going to help you significantly. Um, but if you're looking at a million dollar four unit properties, what I'm looking at, right? So 1, 2, 3, 4 units, typically at these price points, rents are going to be how much higher, right? So you're looking at 2750, 2,500, 2,500, and then you can't count the owner's unit because you actually live in that unit, right? Gives you a total income of 7,750, but lenders use 75% of that income. And the reason why they do that is they account for a 75% vacancy rate. And so that's the lender is going to use this income. Now what is odd about this is that they don't take any taxes out. So you just use that as straight income to qualify, which is cool, but it's scary. Okay. So here you're going to see a residual income 4202. That's your regular pay. You're going to see your rental income being straight added to this. Subtracting out your liabilities, your residual income is going to be 3,060 and you only require a thousand three and then your debt to income ratio is 63. So again, with good credit, this definitely makes sense to do, right? Like this is something you should be able to get an approval on. Uh, but that, and it'll also tell you the total reserves you're required to have, which in this case, you need this after all your closing costs have been factored in. So again, these are things you need to fact to factor in. Now let me give you guys an example of a hundred percent disabled permanent total. And then you might have some, a vet might have an additional, let's say 60,000 a year, right? So you add in 5,000 income and let's make things easy. The spouse also makes 60,000 years, additional 5,000 combined together right of taxable income, looking at your pay stubs for the last 30 days, right? You're going to take out the total federal state and other taxes that you have. So I'm just going to use an example. Okay. So I'm not saying here that I have all the keys to this and what it is. So let's just say, uh, the federal, you're paying 2,000 in taxes on the 10,000 in income. You're paying another 1,500 in state taxes. And then let's say another 600 in, um, let's say social security and anything else expected in debt. So this will automatically translate into this calculation, right? So now this is where you can start seeing that you can go much higher on your purchase than you would with just having regular income, because now you have a significant amount more income coming in, which again, this starts to drive that price, uh, much higher, like, like significantly higher. Right. You'd be looking at almost a million dollar property, right? But it's all going to be dependent on how you control your liabilities because this is where most people mess up, right? They'll have, you know, two eight, you know, two, $1,000 car payments, credit cards, maxed out, control your budget, and you can be able to do the same thing. Now this drastically changes your multifamily purchase requirement. Oh, we need 2 million is what we want to go for. So even purchasing a 2 million property would be doable with that income. That's just why liabilities is such an important aspect to, uh, being able to do this. So hopefully this guy's was helpful. Download the link. Let me know what you think. If you want other videos like this, happy to help hit the subscribe, like the subscribe button, and I'll talk to you guys soon.