Basic Facts First: On a VA home loan, the Veteran’s spouse’s debt obligations have to be counted against him/her when qualifying even if the Spouse will not be a borrower on the VA loan (i.e. “non purchasing spouse”).
Underwriters therefore add up all the monthly debts belonging exclusively to the spouse and count them against the Veteran (Borrower).
And since the spouse is not signing on the loan, his/her income, if working, is typically not used.
However a very little known fact is that VA actually allows *THAT PORTION OF THE SPOUSE’S INCOME THAT IS EQUAL TO THE MONTHLY DEBT OF THE SPOUSE**** to be used to offset the debt.
Here’s an example
Veteran has $5000/mo income and $1000/mo debt of his/her own
Spouse has $2000/mo income and $700/mo debt of his/her own
We can use $700 ** of the spouse’s $2000mo but no more*** to offset the debts.
This gives us total debt of $1700/mo but total useable income of $5700/mo.
Thanks Vets for serving our country! 🙂