What is the maximum debt ratio you can have with a VA loan?  My debt ratio will be around 41%. I currently have a house in another state that I am renting. My debt ratio includes the mortgage payment on the rental and 75% of the rent as income. My credit score is 720. I am currently renting and my rental payment is about $400 more than my house payment would be.

33/50

I have gotten approvals on VA loans with DTI as high as 60%.....the bigger concern is going to be residual income....have you looked at that to make sure you qualify?  Also, using rental income is a bit trickier these days than it used to be.  Do you have a history of renting that property out for at least 12 months?  I think most investors are going to want to see tax returns and use whatever you made or lost on the property to claculate your DTI. 

Residual income is the amount of net income available to the borrower after all monthly debts are paid. The appropriate residual income amounts vary according to loan size, family size and region of the country.  Refer to the following calculation to determine residual income:

PITI + HOA Fees + Monthly Revolving/Installment payments + Child Care/Child Support/Alimony DIVIDED by Gross Income + Other sources of Net Income = Residual Income

It varies depending on where you are buying......

With good credit you should have a pretty high DTI threshold...

The DTI on VA loans is 41%, however there are always exception to this rule. The first one is that if your DTI exceeds 41% and the underwriter can document compensating factors to approve and the 2nd one is if your residual income is more that 20% of the amount VA has determined for your area, see http://www.warms.vba.va.gov/pam26_7.html, go to chapter 4, pages 56 - 57 show charts for residual income.

The calculation for residual income is actually calculated by:

Taking your gross income and subtract the following expenditures: federal withholding taxes,  monthly debt (revolving/installment payments),  PITI + HOA dues, job related expenses shown on your paystubs or tax returns, alimony or child support and maintenance and utilities (calculated by taking the home sq. ft. x 14 cents)