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If you have earned the right to apply for a VA loan, you still have to be approved and qualify for the loan through a lender. When it comes to qualifying for the loan, you can take steps to increase your chances.

1. Ensure You Have Reliable Income

First, you are going to want to ensure that you have a reliable income. You will have to meet a specific residual income requirement, which is essentially the amount of money you have leftover after paying all of your significant expenses each month. Major expenses include things such as installment loans, revolving loans, childcare, mortgage, and utilities. The VA wants to approve loans for people who can afford to pay for the loan and take care of a home.

The residual income guidelines that you have to meet depends on where you live and how many people are in your family.

2. Need an Acceptable Debt-to-Income Ratio

Second, you need to have an acceptable debt-to-income ratio to qualify for a VA loan. To calculate your debt-to-income ratio, all of your monthly debt payments, such as car loans, student loans, and credit card payments, and divide that by your income each month.

Lenders like to use this number to figure out if they think you will be able to repay the mortgage they give you every month. Lenders are responsible for ensuring you can pay your mortgage, as it is not beneficial to them to foreclose on your home. That is why your debt-to-income ratio matters. You can control this number by reducing your debt. Paying off your smallest loan, or paying down your credit cards, can help you achieve a better ratio.

3. Better Credit Equals Better Rates

With a VA loan, you don't need a stellar credit score to qualify for a loan. That is one of the benefits of the VA loan program. However, that doesn't mean your credit score doesn't matter. A higher credit score will help you secure a better rate on your loan, which essentially reduces the interest you pay on the life of the loan for your home. This will allow you to pay off less money for the loan.

4. Get Your COE

Finally, you are going to want to get a Certificate of Eligibility to finalize the loan process. This is something you are going to need to get from the VA eBenefits portal online. You don't need it to start the loan process, but you will need it to close on the loan.

With a VA loan, you need a reliable source of income, a lower debt-to-income ratio, and your Certificate of Eligibility. A better credit score will help you secure a more favorable interest rate.