Can You Gross Up VA Disability Income?

Disabled veterans looking into home loans, including VA home loans, want to know about ‘grossing up VA disability.’

But what exactly does that mean? 

In this post, we’ll answer the question, “Can you gross up VA disability income?”

We’ll also explain how this relates to both VA loans and conventional loans. 

Let’s get started.

Can You Gross Up VA Disability Income For Home Loans?

Yes, some lenders do have the option to gross up VA disability income for home loans.

This means they can consider a higher amount of the veteran’s VA disability income when calculating their eligibility for a home loan.

Grossing up involves increasing the reported income by a specific percentage (typically 125% or 25%) to account for taxes that are not actually deducted from tax-exempt income, like VA disability payments.

However, not all lenders offer this option, so it’s essential for veterans to inquire with different lenders about their specific policies regarding grossing up VA disability income for home loans.

Is it Possible To Increase VA Disability Income When Applying For a VA Home Loan?

No, it is not possible to increase VA disability income when applying for a VA home loan. 

The VA determines the amount of VA disability compensation a veteran receives based on their disability rating and other qualifying factors. 

Veterans can’t arbitrarily change their disability income to secure a higher loan amount. 

However, the consideration of VA disability income for a VA home loan application varies from lender to lender.

Each lender has its own policies and criteria when evaluating a borrower’s financial profile, and the inclusion of VA disability income as part of the overall income calculation depends on the specific lender’s guidelines. 

It’s important for veterans to consult with individual lenders to understand their policies regarding the inclusion of VA disability income in the loan application process.

Disclaimer

When applying for a VA home loan, it is important to note that your VA disability compensation is considered part of your income for loan qualification purposes by some lenders. 

This means that your VA compensation will be included in the calculation of your overall income. 

It’s essential to understand that by including your VA compensation as part of your income, it becomes a factor that lenders can consider in the event of loan default. In this situation, the lender may have the right to pursue your VA compensation as a part of the repayment process.

It is advisable to consult with your lender and thoroughly review the terms and conditions of your loan agreement to fully comprehend the implications of including your VA compensation as income for your VA home loan application.

What Documentation Is Required For Grossing Up VA Disability Income?

When applying for a home loan and grossing up your VA disability income, you will typically need to provide documentation to support your income claims to your lender. 

This may include copies of your VA disability award letter, bank statements showing consistent deposits of your disability income, and tax returns. 

Having a well-organized file of these documents can streamline the loan application process and increase your chances of a successful gross-up.

How Much Can You Gross Up VA Disability Income?

The amount you can gross up your VA disability income varies depending on the lender and the type of loan you’re applying for. 

Typically, lenders may allow a gross-up of 25% to 125%, which means your lender can add 25% to 125% to your actual VA disability income.

Are There Benefits To a VA Disability Gross Up?

Yes, there are significant benefits to grossing up VA disability income for veterans. 

By increasing your reported income, you can qualify for larger home loans and secure more favorable terms.

This can be especially helpful for veterans who may have a higher debt-to-income ratio due to other financial obligations. 

Grossing up VA disability income can be a valuable tool in making homeownership more accessible and affordable.

However, it’s essential to consult with a knowledgeable mortgage professional to ensure that you meet all the necessary criteria and to determine the best approach for your unique situation.

Can Your Lender Gross Up VA Disability Income On a Conventional Loan?

Yes, your lender can gross up VA disability income on a conventional loan, but the specific rules and percentages may vary between lenders. 

It’s crucial to consult with individual lenders to understand the applicable guidelines for grossing up VA disability income in the context of a conventional loan application.

Applying Gross-Up to VA Loans and Conventional Loans

• VA Loans: When applying for a VA home loan, grossing up your VA disability income can be beneficial as it increases your qualifying income.

 This can help you qualify for a larger loan amount or improve your debt-to-income ratio, making homeownership more attainable.

• Conventional Loans: Grossing up VA disability income for conventional loans may also be an option, but working closely with your lender to determine eligibility and the percentage allowed is essential. Conventional loans have different criteria, and the allowable gross-up amount may vary between lenders.

Conclusion

In summary, grossing up VA disability income can be a valuable tool for veterans and service members looking to secure a home loan, whether it’s a VA loan or a conventional loan. 

Understanding how to apply this concept and the varying percentages allowed is crucial for maximizing your home buying potential. 

To navigate this process successfully, it’s highly recommended to consult with a knowledgeable mortgage professional who can guide you through the intricacies of grossing up VA disability income and help you achieve your homeownership goals.

(FAQs) Frequently Asked Questions

What does “grossing up” VA disability income mean?

Grossing up VA disability income refers to adding a certain percentage to your actual VA disability compensation when calculating your income for a home loan application. This could increase your qualifying income.

How much can your lender gross up VA disability income?

The allowable percentage for grossing up VA disability income can vary depending on the lender and the type of loan.

Typically, it can range from 25% to 125% of your actual VA disability income.

Can I gross up VA disability income for a VA home loan?

No, VA disability income cannot be grossed up for a VA home loan.

VA disability compensation is calculated based on the veteran’s disability rating and cannot be artificially increased for the purpose of qualifying for a higher loan amount. 

Lenders assess VA disability income as part of the applicant’s overall financial picture, but it cannot be grossed up or manipulated to secure a larger loan.

Is it possible to gross up VA disability income for a conventional home loan?

Yes, some conventional lenders may allow grossing up VA disability income, but the rules and percentages may differ from those of VA loans. It’s essential to discuss this with your lender for specific details.

How do I determine the appropriate gross-up percentage for my situation?

The allowable gross-up percentage depends on the lender and the loan type. To determine the correct percentage for your application, it’s essential to consult with your lender or a mortgage professional who can provide guidance based on your specific circumstances.

Are there any limitations or restrictions on grossing up VA disability income?

Yes, lenders may have varying policies and guidelines regarding grossing up VA disability income. It’s crucial to work closely with your lender to understand any restrictions or limitations that may apply.

Can grossing up VA disability income affect my eligibility for other government benefits?

No, grossing up VA disability income for a home loan application typically does not impact your eligibility for other government benefits. However, consulting with a financial advisor or benefits specialist is advisable to ensure a comprehensive understanding of your situation.

Is there a minimum VA disability income requirement for grossing up?

No, there is no specific minimum income requirement for grossing up VA disability income. However, your total grossed-up income should meet the lender’s criteria for loan approval.

How can I get started with grossing up my VA disability income for a home loan?

To begin the process of grossing up your VA disability income, reach out to a reputable mortgage lender or broker experienced in working with veterans. They can provide guidance, assess your eligibility, and help you navigate the application process.

Ready to Increase Your VA Rating?

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If you’ve filed your VA disability claim and have been denied or have received a low rating—or you’re unsure how to get started—reach out to us! Take advantage of a FREE VA Claim Discovery Call. Learn what you’ve been missing—so you can FINALLY get the disability rating and compensation YOU DESERVE!