Bank/Lenders recommendations and guidance to utilize VA Loan

Seattle, Washington
First-Time Home Buyer
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Bank/Lenders recommendations and guidance to utilize VA Loan

Jeremy BautistaPro Member
Lynnwood, WA · Member since 2026 · 6 posts · 6 votes

Aloha everyone,

I'm looking to use my VA loan to purchase my first rental property. I recently went to Navy Federal Credit Union for a prequalification to see what I might be eligible for. Unfortunately, I was told that I likely wouldn't qualify due to my debt-to-income (DTI) ratio being above the 41% threshold.

After doing more research on VA loans, I've come across information in books and videos suggesting that VA loans can sometimes approve borrowers who might not qualify for conventional financing—particularly because of the residual income requirement. However, Navy Federal didn't mention residual income during my consultation. It left me feeling a bit discouraged and unsure, especially since I assumed a military-affiliated institution would be well-versed in the nuances of VA lending.

I’d really appreciate any insight into my situation and guidance on steps I could take to move forward in this financial journey.

Here’s a snapshot of my current situation:

  • Target price range: $400,000–$500,000
  • Type of House: Duplex
  • Occupation: Registered Nurse
  • Gross monthly income: $7,902
  • Monthly expenses:
    • Rent: $1,921
    • Student loan: $503 (GI Bill did not cover 100%)
    • Credit card: $585 (this includes utilities, phone bill, auto insurance, and subscriptions — no revolving credit card debt)
  • Credit score (Credit Karma): 811

Any advice, clarification, or recommendations would be greatly appreciated. Thank you in advance!

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Ryan ThomsonBusiness Member
Real Estate Agent · Colorado Springs, CO · Member since 2018 · 1k+ posts · 1k+ votes
7mo

The DTI issue at Navy Federal is real, but NFCU applies that 41% threshold more rigidly than most VA lenders. Brokers with solid VA experience regularly get approvals at 55-65% DTI when residual income is strong, and with $7,902 gross and an 811 credit score, your residual picture is stronger than what NFCU walked away from.

One angle nobody has mentioned yet: VA loans are assumable. Instead of originating a new loan at 6.25%, you could assume an existing VA loan at 2.75-3%. On a $450K balance, that's a payment around $1,870/month instead of $2,780. That $910/month difference changes your DTI math completely.

The catch: finding a VA seller willing to let a non-vet assume. Their entitlement stays tied to the loan until it's paid off or refinanced, so most VA sellers prefer a vet buyer who can swap entitlement. But it does happen, and for someone in your DTI situation, the payment reduction can be the difference between qualifying and not.

Worth having your buyer's agent pull assumable VA listings alongside your regular duplex search in the Seattle metro. Some exist in that price range.

What do your monthly debt obligations look like total? That'll clarify how far you actually are from qualifying.

The Assumable Guy544 Reviews
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  • Melvin ListBusiness Member
    Lender · Tampa, FL · Member since 2016 · 1k+ posts · 381 votes
    7mo

    I would reach out to a broker in your area. The max 41% DTI is in the VA handbook but you can go much hire than that with Fannie's Automated Underwriting.

    C2 Financial
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    • Jeremy BautistaPro Member
      OP
      Lynnwood, WA · Member since 2026 · 6 posts · 6 votes
      7mo
      Quote from @Melvin List:

      I would reach out to a broker in your area. The max 41% DTI is in the VA handbook but you can go much hire than that with Fannie's Automated Underwriting.


       Thank you Melvin for guidance. I've started to make appointments with local brokers in the area. 

      1Reply
  • Derek BrickleyBusiness Member
    Lender · Ann Arbor, MI · Member since 2021 · 676 posts · 228 votes
    7mo

    Hey Jeremy!

    Yeah you definitely shouldn't be capped at 41% debt-to-income ratio for a VA loan. With residual income I've seen up to 65% debt-to-income before on VA.

    Unfortunately that's the image they try to promote but at the end of the day we see that quite often where they don't actually look that deep.  

    So I'd say for sure don't give up, should be some different ways to help make it happen.  If it's helpful feel free to reach out

    [email protected]734-645-7722
    Gold Star Mortgage Financial Group548 Reviews
    WebsiteView Page
    2Reply
    • Jeremy BautistaPro Member
      OP
      Lynnwood, WA · Member since 2026 · 6 posts · 6 votes
      7mo
      Quote from @Derek Brickley:

      Hey Jeremy!

      Yeah you definitely shouldn't be capped at 41% debt-to-income ratio for a VA loan. With residual income I've seen up to 65% debt-to-income before on VA.

      Unfortunately that's the image they try to promote but at the end of the day we see that quite often where they don't actually look that deep.  

      So I'd say for sure don't give up, should be some different ways to help make it happen.  If it's helpful feel free to reach out


       Hey Derek! I've sent you a message in your inbox. Thank you for the reassurance. 

      1Reply
  • Ryan ThomsonBusiness Member
    Real Estate Agent · Colorado Springs, CO · Member since 2018 · 1k+ posts · 1k+ votes
    7mo

    The DTI issue at Navy Federal is real, but NFCU applies that 41% threshold more rigidly than most VA lenders. Brokers with solid VA experience regularly get approvals at 55-65% DTI when residual income is strong, and with $7,902 gross and an 811 credit score, your residual picture is stronger than what NFCU walked away from.

    One angle nobody has mentioned yet: VA loans are assumable. Instead of originating a new loan at 6.25%, you could assume an existing VA loan at 2.75-3%. On a $450K balance, that's a payment around $1,870/month instead of $2,780. That $910/month difference changes your DTI math completely.

    The catch: finding a VA seller willing to let a non-vet assume. Their entitlement stays tied to the loan until it's paid off or refinanced, so most VA sellers prefer a vet buyer who can swap entitlement. But it does happen, and for someone in your DTI situation, the payment reduction can be the difference between qualifying and not.

    Worth having your buyer's agent pull assumable VA listings alongside your regular duplex search in the Seattle metro. Some exist in that price range.

    What do your monthly debt obligations look like total? That'll clarify how far you actually are from qualifying.

    The Assumable Guy544 Reviews
    WebsiteView Page
    2Reply
  • Matthew Bernal
    Investor · Austin, TX · Member since 2021 · 497 posts · 127 votes
    7mo

    Thanks for sharing all the details — it really helps paint the picture. VA loans can be tricky with DTI, but there are often ways to structure financing that take residual income and rental income into account, especially for duplexes.

    If you want, we can hop on a quick call to review your numbers and explore options beyond the traditional bank route — there might be programs that can help you qualify while keeping your VA benefits intact.

    I can also walk you through the typical steps and requirements upfront so you know what lenders will be looking for before applying.

    Would you like to schedule a time to chat?

    0Reply
  • Patrick Roberts
    Lender · Charleston, SC · Member since 2019 · 1k+ posts · 1k+ votes
    7mo

    There is no specific DTI limit for VA loans like there is for Conventional and FHA. If AUS approves, then the DTI is fine. AUS approvals are based on credit risk determination, so higher credit score, higher reserves, etc influence approval. One borrower may get declined at 45% DTI and another approved at 70% for the same deal.

    VA loans work off of Residual Income, which is a different type of income and affordability calculation. The amount of residual income required for a VA loan depends on your household/family size, the region of the US (there are four specific regions), and whether your DTI is above or below 41%. Also, other costs are included in residual income that are not included in DTI, such as expected maintenance costs (which is based on the square footage of the property youre buying), childcare, and others.

    Two other tidbits: VA loans cannot be used for investment properties. They are only for primary residences, which means you will have to live in the property. Not sure if youre aware of this or are planning to occupy one of the units.

    Secondly, if youre buying a multifamily property, you will need 6 months of reserves in addition to cash to close. Also, VA loans require landlord experience for multifamily properties, so if you dont have this, you will likely have to hire a property management company and include their cost/fees in the residual income calculation as part of the loan process.

    I will continue to say this - banks and credit unions are horrible at originating mortgages because they dont invest in the infrastructure needed to be good at originating. Find a reputable specialty lender or broker to work with. 

    I dont lend outside of the Southeast so Im not able to help you with this. 

    1Reply
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