There is a little known VA secret that can help you qualify for a home loan and reduce your debt at the same time! Hardly any loan officers know about it!

I was recently told by a loan officer that a client of mine could not qualify for the $500,000 Hawaii home she wanted. He said the buyer could maybe buy a house for around $400k, which is not possible in the Honolulu neighborhood where my client wanted to buy.

My client was sad and ready to give up on this deal. Then I asked her what kind of debt she had.  There was a $600 car payment with a $5000 balance, and I remember a very important lending rule. Actually it's 2 rules combined:

(When using a VA loan) Little known Rule 1 - The lender will allow the seller to pay off a buyer's debts through seller paid closing costs up to 4% of the sales price.  Now in this case we didn't actually need the seller to pay all the balance, because of...

Little known Rule 2 - if a car loan has 10 payments or less remaining, the underwriter doesn't have to calculate that payment into the debt ratio.

So I structured an offer with the seller paying $8000 in closing costs to cover half the car loan balance, and guess what? The loan officer was able to get the loan approved. In this case, the loan officer didn't even know the rule existed!

So just because a lender says your borrower can't qualify, you shouldn't always believe them. Now in Hawaii real estate, the VA loan goes up to $783,750, which means a seller can pay $31,350 toward a buyer's debt. Now if you could have that much debt paid off, it might make you want to buy a house in Hawaii!  In other states the VA limit is much lower, but since Hawaii homes are so expensive, we have some very high loan limits.

In any case, if you are eligible for a VA loan and you have some debt you would like paid off, consider asking a seller to pay it off when you buy a house, especially in Hawaii.

Ok I would write more but it's time to go surfing.  Hey it's Hawaii!