Home Loan Qualifying

• Home mortgage lenders use the applicant's debt-to-income ratio to qualify borrowers. Military compensation payments provide a basic income base or supplement other income sources used to qualify for a loan. Lenders look for military personnel capable of making payments up to 36 percent of the borrower's monthly gross income. Military members with long-term debt have less chance for approval than other applicants, but lenders in 2011 frequently allowed active and former military members a debt-to-income ratio up to 41 percent, provided the applicant has good credit scores.
  
  

Military Compensation

• The armed forces, including Army, Marine Corps, Navy, Air Force, National Guard and Coast Guard, provide monthly wages for service members. Military compensation includes regular service and reserve pay, and any regular disability or retirement payments. The armed forces issue bonuses and combat-related, hazardous-duty and imminent-danger pay, and this money qualifies for the down payment for a home, but is not considered regular income for a home mortgage loan because of the irregular nature of the payments.
  
  

Lender Demands

• Individual mortgage lenders determine the qualification standards for buyers applying for home mortgages, but as a rule, buyers must have an income-to-debt ratio matching the lender's standards. Mortgage lenders typically view military loan applicants more favorably than other applicants due to the stability of military personnel's employer, the federal government. The military also allows the lender to automatically reserve part of the soldier's pay to meet monthly mortgage payments and attach income for military members failing to meet the loan payments.
  
  

Stable Income

• Mortgage lenders require any borrowers, including those with military service, to have a regular and stable income to qualify for home mortgage loans. If the Veterans Administration awards temporary disability compensation for a military injury, the mortgage lender considers the income temporary and requires the borrower to have an additional source of income to substitute for any potential future benefit reduction to qualify for a mortgage loan.
  
  While the level of federal disability benefits can never be fully guaranteed, the Veterans Administration does provide vets a stable source of benefit income for retired service members. This income qualifies as a stable cash resource for home mortgage qualifying.
  
  

Home Loan Guaranty

• The Department of Veterans Affairs provides home loan guaranties to veterans, active military and members of reserve units to purchase residential housing using a VA home loan. Veterans Administration Eligibility Centers issue applications and grant certificates for use in purchasing homes. In addition to the certificate, military applicants must have a "good credit rating, sufficient income" and "agree to live in the property."