How to Calculate Maintenance & Utilities on a VA Loan

By Joey Campbell

Our armed forces deserve every privilege that can be given them for the time they have spent insuring our freedom. One of these is a 100-percent home loan that is offered to those veterans who can qualify. The Veterans Administration (VA) does not fund the loan, but guarantees lenders that it will cover losses in the event the borrower defaults on the loan. The guidelines require that an estimated cost of living in the home be considered when calculating debt ratios and monthly expenses to decide if a veteran can qualify for the loan.

Find your appraisal, and go to the page that shows the analysis of the cost to rebuild. This breakdown will show you the heated square footage of the home, and the unheated area--such as the garage.

Add these heated and unheated square footage amounts together. For example, your home is 2,000 square feet, plus garage space of 400 square feet, which totals 2400 square feet.

Multiply the total square footage of your home times the 14-cents-per-square-foot VA allowance for an estimate of monthly utilities and maintenance. Example: 2400 times 14 cents per foot equals $336.00. This is the monthly amount that would be used in the VA expense worksheet for shelter expense.

The calculation of utilities and maintenance is used on the VA worksheet, and shown with the principal, interest, taxes and insurance and homeowners association fees payment, and is known as the monthly shelter expense. The utilities and maintenance amount is not used in calculating the borrower's debt ratios.

The VA has two qualifying calculations: All consumer debts and the housing payment of principal, interest, taxes and insurance--PITI--should not exceed a debt ratio of 41 percent of the combined monthly income. The VA requires that there be residual income left over after all income is calculated and all of the monthly expenses are subtracted out. Example: A family of four would be required to have $1003 left over when all shelter expenses, child care and monthly debts are paid. Talk with your VA lender regarding these two qualifying methods.

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