What are the VA Residual Income Requirements?

VA Residual income requirements are important in order to qualify for a VA loan. You must meet a specific residual income threshold, which varies depending on the size of your family and where you live.

Residual income is the amount of net income remaining each month after deduction of all of your major expenses (including housing, taxes, and debt payments). What is left over is to cover family living expenses such as food, healthcare, clothing, gasoline and other regular household and family needs.

Residual income is sometimes confused for debt-to-income ratio, which is your monthly income vs. your monthly debt. Your debt-to-income ratio is used by your lender to determine VA loan eligibility. However, the Department of Veterans Affairs wants to make certain that you have enough money left over to take care of your day-to-day expenses.

The VA’s minimum residual income is considered a guide instead it’s most often considered in conjunction with other credit factors.

Factors that are included in the VA Residual Income calculation are, but not limited to:

Location of property as defined by the VA using the residual income chart listed below

• Loan amount
• If the veteran or spouse is an active-duty or retired veteran and is able to take advantage of the benefits resulting from the use of military facilities located near the subject property, the residual income requirement is reduced by 5%
• Number of persons residing in the home, regardless of relationship to the veteran, and/or whether they will take title to the property
• Non-taxable income may not be grossed up when calculating the veteran’s residual income
• Even children who reside in the home part-time must be included in the household size

The following items must be deducted from the total gross income when calculating residual income:

• All items used in calculating the ratio
• Maintenance and utility expense
• Social Security taxes – 4.200% of monthly income
• Federal income taxes
• State income taxes

VA Residual Incomes by Geographic Region for loan Amounts $79,999 and below

VA Residual Incomes by Geographic Region  for Loan Amounts of $80,000 and above

Key to VA Residual Income Geographic Regions