What VA Loan Can I Afford?

When it comes to buying a new home, you likely have an idea of what you want. Your mind is full of ideas ranging from your dream kitchen to that massive backyard where the entire family can play football or gather around a firepit during those cool summer nights. It’s exciting, but there’s one thing you need to figure out before you start looking for properties: how much home you can really afford. VA home loans make it easy to finance the purchase, but it’s up to you to pay back those loans on a monthly basis. Here’s what you need to know.

Understand Your Monthly Expenses

Everyone has bills and you need to factor in those bills when you establish a budget for your new home. Think about what you spend every month on utilities, insurance, gas, cable, phone plans, and any other recurring monthly expenses. If you have existing debt, consider how much you have to pay each month to start repaying that debt.

Once you total that up, you’ll have a clear picture of what you spend each month. Compare this with how much you and your family earn in income. Ideally, your monthly VA loan payment will be less than what’s leftover.

When In Doubt, Keep It Small

The bigger your loan is, the more money you’ll owe each month in mortgage payments. If you’re not careful, this can put a serious strain on your monthly budget and leave you feeling like you bought more home than you need. Worse, you could end up not being able to afford those monthly payments, putting you at risk of losing your house.

The best thing you can do when considering which VA home loans you can reasonably afford is to narrow your home search to lower-cost properties. The cheaper a home is, the less money you’ll have to borrow to buy it. The smaller your loan is, the lower your monthly payments will be for the life of your loan.

Know Your Credit Score

Though VA home loans are easier to qualify for than traditional mortgages, lenders can still be a bit picky. They can and likely will ask for your credit score and the higher it is, the larger loan amount you’ll qualify for. A low score may not disqualify you from the loan the same way it would a traditional mortgage, but it can influence how much money you’re able to borrow and thus which homes you’re able to consider buying.

There Are Ways to Improve

If you have a low credit score, don’t panic. There are a few things you can do to improve your score. It just might mean waiting a bit longer to buy the home of your dreams. Start by paying down your existing debts and avoid taking out new loans or opening new credit cards until your balances are paid off. As the amount you owe decreases, your score will go up and you’ll be more likely to get the loan you’re looking for.