d. Applicant as Co-obligor on Another’s Loan

The applicant may have a contingent liability based on co-signing a loan.  If

·   there is evidence that the loan payments are being made by someone else, and

·   there is no reason to believe that the applicant will have to participate in repayment of the loan, then

·   the lender may exclude the loan payments from the monthly obligations factored into the net effective income calculation in the loan analysis.

e. Pending Sale of Real Estate

In some cases, the determination that the income and/or assets of a veteran are sufficient to qualify for the loan depends upon the consummation of the sale of presently owned real property.  Sales proceeds may be necessary to

·   clear the outstanding mortgage(s) against the property

·   pay off outstanding consumer obligations, and/or

·   make a down payment or pay closing costs on the VA loan.

Alternatively, the veteran may intend to sell the property with the buyer assuming the outstanding mortgage obligation.

The lender may disregard the payments on the outstanding mortgage(s) and any consumer obligations which the veteran intends to clear if available information provides a reasonable basis for concluding the equity to be realized from the sale will be sufficient for this purpose.

References: 

·   See section 4 of chapter 5 for prior approval loans dependent upon the sale of property for the borrower to qualify.

·   See section 6 of chapter 5 for required loan closing documents.