Tips & Special Topics
About VA Form 26-6393
Added March 30, 2011
VA Form 26-6393 is an important form used by VA underwriters to help determine an applicant’s ability to pay for a VA loan. The form is not filled out by borrowers. Rather, it is a tool that helps underwriters keep track of borrower qualifications when being considered for a VA-guaranteed mortgage. The components that make up VA Form 26-6393 include:
• Section A – Loan Data
• Section B – Borrower’s Personal and Financial Status
• Section C – Applicant’s Estimated Monthly Housing Expenses
• Section D – Borrower’s Debts and Obligations
• Section E – Applicant’s Monthly Income and Deductions
• Section F – Disposition of Application and Underwriter Certification
Sections A and B are simply for providing general information about the borrower. During the loan application, the VA home loan professional will ask the applicant for their name, birth date, occupation, employment information and duration, assets, current monthly housing expenses and dependents. Also, if applying jointly, this same information will be asked of the co-applicant.
The VA underwriter will use Section C to review the applicant’s estimated monthly shelter expenses on the home being financed or purchased. Factors that are considered for this section include actual/projected property taxes, flood and hazard insurance premiums (if any), special assessments, maintenance and utilities calculation (14 cents per square foot), and HOA or Condo fees (if any).
For Section D, the underwriter reviews the borrower’s current debts and obligations. This can include usual debts like car loans or leases, student loans, and credit card debt as well as monthly alimony and child support payments. Also, any job-related expenses such as significant commuting costs and childcare expenses will need to be disclosed here. Items in this section will be considered “debt” in the debt-to-income calculation.
In Section E, the underwriter will review the borrower’s monthly income and deductions. Items like gross earnings from employment, tax deductions, net take-home salary, pensions and retirement funds are entered here. These will be considered “income” in the debt-to-income calculation.
From Sections C, D and E, a VA underwriter will determine what’s called a borrower’s debt-to-income (DTI) ratio. The VA recommends that borrowers have a DTI ratio of 41%.
Also, from Sections C, D and E, a VA underwriter compares the amount of residual required against the actual residual income. This is used to determine the “ability to pay” the VA loan. A special residual income table based on the region in which the applicant lives and number of dependents is used for this calculation.
Based on the information on VA Form 26-6393, the VA underwriter will make his or her recommendation to approve or deny the applicant for the VA guaranteed loan. An underwriter’s approval means that the applicant has been determined to have the ability to pay the VA home loan.
For additional information about VA Form 26-6393 or other VA forms used in the VA home loan underwriting process, ask your VA-approved specialty lender.
