Clarksville Homebuyer Guide

Part 2 of the 5-part series “VA Loans: 100 Questions Answered” by Kate Matties-Deiboldt, Sr. Mortgage Advisor serving Clarksville, Fort Campbell & Montgomery County.

Overview

We dive into financing specifics — down payment rules, credit requirements and how lenders assess income and residual income for VA loans. Understanding these guidelines helps you plan your Clarksville or Fort Campbell budget.

Questions 21-40

21. Do VA loans require a down payment?

No. One of the biggest benefits of the VA loan is that qualified borrowers can finance 100% of the purchase price. That means you may not need any down payment, although you can choose to put money down if you wish.

22. Is zero down really possible?

Yes. Because the VA guarantees a portion of the loan, lenders are willing to finance up to the full purchase price. You’ll still need to budget for closing costs and prepaid items, but the down payment itself can be zero.

23. Can I still make a down payment?

Absolutely. Some buyers choose to make a down payment to reduce their loan amount, lower their monthly payment or reduce the VA funding fee. Putting at least 5% down can lower the funding fee percentage.

24. Does a down payment eliminate the VA funding fee?

No. While a down payment reduces the funding fee rate, only veterans receiving VA disability compensation are exempt from the funding fee. We’ll cover funding fee details in Part 3.

25. Can seller concessions cover my closing costs?

Yes. The VA allows sellers to pay certain closing costs and prepaids on your behalf. Seller concessions can include paying your funding fee, prepaid taxes and insurance, or even paying off debts. However, there is a limit: seller concessions cannot exceed 4% of the loan amount.

26. What credit score is required for a VA loan?

The VA itself doesn’t set a minimum credit score, but most lenders require a minimum score around 620. Some will consider scores in the 580–600 range with compensating factors, such as strong residual income or significant savings.

27. Can I get a VA loan with no credit score?

It’s possible. Borrowers with no traditional credit history can still qualify by demonstrating responsible payment history through non-traditional trade lines, such as rent, utilities or insurance payments. Lenders may require additional documentation.

28. Does the VA look at my debt-to-income (DTI) ratio?

Yes, but there is no hard cap. Most lenders prefer a DTI below 41%. If your DTI is higher, you may still qualify if you have strong residual income or other compensating factors.

29. What is residual income, and why is it important?

Residual income is the amount of money left over each month after paying major obligations (mortgage, debts, taxes, insurance). The VA sets residual income guidelines based on region and family size. Meeting the residual income requirement ensures you have enough cash flow for living expenses, making VA loans more affordable for borrowers.

30. Does BAH (Basic Allowance for Housing) count as income?

Yes. BAH is non-taxable income for active-duty service members. Lenders typically include BAH in your qualifying income. Because it’s tax-free, your effective income may be higher than it appears at first glance.

31. Does BAS (Basic Allowance for Subsistence) count as income?

Often yes. BAS is also tax-free and can be included in income calculations. Some lenders may apply a slight adjustment, so confirm with your lender.

32. Can overtime and bonus income be used to qualify?

Usually. Lenders can count overtime and bonus income if it is stable and likely to continue. You generally need to demonstrate a history of receiving this income for at least two years.

33. Can self-employment income qualify for a VA loan?

Yes, but you’ll need to provide additional documentation, such as two years of tax returns, profit and loss statements and possibly a letter from your CPA. Lenders want to see stable and predictable earnings.

34. How is disability income treated in VA loan qualification?

VA disability compensation is typically acceptable and may be favorably considered. Because it is non-taxable, it increases your effective income. You’ll need to document the amount and verify that it will continue.

35. Does child support or alimony count as income?

Yes, provided you can document it with court orders and proof of receipt. Lenders want to see that it has been received consistently and will continue for a certain period.

36. Can I qualify for a VA loan while on PCS orders?

Yes. Many military families buy homes while relocating. Your intent to occupy the property within a reasonable time frame (typically 60 days) is key. Lenders may also consider your housing allowance and other benefits in qualifying.

37. How long after bankruptcy can I qualify for a VA loan?

It depends on the type of bankruptcy. After a Chapter 7 discharge, there’s generally a two-year waiting period before using a VA loan. For Chapter 13, you may be able to obtain a VA loan after one year of making court-approved payments and with trustee approval.

38. How long after foreclosure can I qualify?

Typically, you must wait two years after foreclosure before obtaining a VA loan. Demonstrating re-established credit and stable income is important.

39. Does my spouse’s credit score affect my VA loan?

If your spouse will be on the loan, their credit will be considered. In community property states, spousal debts can affect the DTI even if the spouse is not a co-borrower. It’s best to run credit for both spouses early in the process.

40. Can someone co-sign a VA loan if they aren’t my spouse or another eligible veteran?

In most cases, no. A non-spouse co-borrower who isn’t an eligible veteran will require a joint loan, which can reduce or eliminate your VA guaranty. Some lenders do offer joint VA loans, but they involve more stringent guidelines and are not common.

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About the Author: Kate Matties-Deiboldt is a Senior Mortgage Advisor and Branch Manager with VanDyk Mortgage (NMLS #18487), serving Clarksville, Fort Campbell, Montgomery County, and Middle Tennessee. She has 26+ years of experience helping military families, first-time buyers, and clients who’ve been told “no” before.