VA Residual Income: Guidelines, Chart and How to Calculate It

VA residual income is the money left from your monthly income after taxes, your full housing payment, maintenance and utilities, and your other debts and obligations. Lenders compare that leftover amount with a VA guideline based on your region, family size and loan amount. For loans of $80,000 and above, the guideline runs from $441 for a single borrower in the Midwest or South to over $1,000 for a family of four anywhere in the country. Below, you will find the full chart, a worked example and what to do if your number comes up short.

TL;DR

• Residual income is one of two main VA underwriting standards, alongside the 41% debt-to-income (DTI) ratio. Ordinarily you need to meet both, but missing one does not automatically disqualify you.
• The required amount depends on four things: region (Northeast, Midwest, South, West), household size, loan amount and the other monthly obligations in your file.
• If your DTI is above 41% and your residual income is at least 20% over the guideline, the loan avoids the extra second-level review.
• If you miss the residual income guideline but your DTI is 41% or less, approval is still possible with documented compensating factors.
• Every person in your household counts toward family size, whatever their relationship to you.

Table of Contents

• What VA residual income is, and whether it is required
• The VA residual income chart for loans of $80,000 and above
• How to calculate your residual income
• A worked example
• Residual income and the 41% DTI benchmark
• What if you fall short?
• Our perspective
• Get your VA numbers reviewed
• Common mistakes that affect residual income
• FAQ
• Sources

What VA residual income is, and whether it is required

Residual income is the net income that remains to support your family after your obligations are paid. The VA built it into the loan program because a payment can look affordable as a percentage of income and still leave a household short on groceries, fuel and clothing.

The rule sits in federal regulation. 38 CFR 36.4340 names the debt-to-income ratio and residual income analysis as the two primary underwriting standards. Ordinarily the veteran must meet both. Failing one does not automatically disqualify you, and that is why the rest of this guide matters: the details of your file decide the outcome.

So is it required? Yes, in the sense that every VA loan file gets a residual income analysis. A guideline is not a pass or fail test in isolation. It is one of two tests, and underwriters weigh them together with your credit, employment and assets.

There is no minimum credit score or income written into this rule. The VA does not set a fixed income limit. The guideline is the amount you must have left over, which grows with the size of your household.

The VA residual income chart for loans of $80,000 and above

The guideline amounts come from the Consumer Expenditure Survey published by the Bureau of Labor Statistics. The regulation says the regional minimums were developed from that data, with separate tables for loan amounts up to $79,999 and for loan amounts of $80,000 and above. The table below shows the $80,000 and above amounts, taken from 38 CFR 36.4340(e). Most home purchase loans fall in this group.

For each additional household member, up to a family of seven, add $80. Applying that rule, a family of six in the South would have a guideline of $1,119, and a family of seven would have $1,199.

The regulation also carries a separate set of figures for loans up to $79,999. If your loan is that small, ask your loan officer for the table that applies. Your state decides your region, so a borrower in Texas uses the South column and a borrower in California uses the West column.

How family size is counted

Family size is a head count of the household, not a tax-filing question. The VA’s own training guide says all members of the household should be counted, regardless of the nature of the relationship. The VA Home Loans Training Guide is explicit on this point. A parent living with you, an adult child or a dependent from a prior relationship all count, which raises your guideline. Give your loan officer an accurate count from the start so the file does not need to be reworked later.

How to calculate your residual income

The VA calculates this on VA Form 26-6393, the loan analysis worksheet. On that form, the balance available for family support is the total net effective income, minus your monthly obligations and your estimated monthly shelter expense (VA Form 26-6393).

In plain terms, the arithmetic looks like this:

1. Start with your gross monthly qualifying income.
2. Subtract federal and state income taxes and Social Security and Medicare contributions.
3. Subtract the full proposed housing payment: principal, interest, property taxes and homeowners insurance (PITI), plus any HOA or condo fees and special assessments.
4. Subtract estimated maintenance and utilities.
5. Subtract monthly debts and obligations, such as car loans, student loans, credit card minimums and child support.
6. Subtract job-related expenses, including child care and any extraordinary commuting costs.

The result is your residual income. Compare it with the figure in the chart for your region, family size and loan amount.

Maintenance and utilities

You do not have to guess this number. Under a change to the VA Lender’s Handbook, the VA uses a nationwide figure of $0.14 per square foot of gross living area for maintenance and utility costs, instead of local charts, as described in the VA Home Loans Training Guide. A 2,000-square-foot home adds $280 a month to the calculation. A larger home raises your required obligations, so square footage matters more than many buyers expect.

Child care and work-related costs

The same training guide says the underwriter must consider job-related expenses such as child care and extraordinary commuting costs. If you pay for daycare, say so early and document it. It reduces the income left over, and it is better to see that on paper before you make an offer than after.

A worked example

The figures below are illustrative, not a quote or a promise of approval. Imagine a family of four buying a 2,000-square-foot home in the South with a loan above $80,000.

The South guideline for a family of four is $1,003, so this household clears it by a wide margin. Its DTI, counting housing plus the $500 in debts, is about 32.5%, which is below the 41% benchmark. Both standards are met.

Now change the numbers. If the same family had $1,800 in monthly debt instead of $500, the residual income would drop to $1,520 and the DTI would rise to about 48.8%. The residual income would still clear $1,003, but the DTI would be above 41%, which brings in the 20% rule explained next.

Residual income and the 41% DTI benchmark

The two standards check different things. DTI is a ratio: under 38 CFR 36.4340(d), the VA benchmark is 41% or less, computed from your monthly PITI, assessments such as condo or HOA fees, and long-term obligations, divided by your total gross income. Residual income is a dollar amount left after real-life costs, including taxes.

This is why a borrower can pass one and miss the other. A high earner with a large mortgage may have a DTI above 41% and still keep plenty of money each month. A lower earner with few debts may have a low DTI and still fall short on residual income in a high-cost region.

The 20% cushion rule

If your DTI is above 41% but your residual income exceeds the guideline by at least 20%, the regulation says a second-level review and a statement of justification are not required. Using the table, a family of four in the South would need at least $1,203.60 in residual income (the $1,003 guideline times 1.2). For a single borrower in the West, the target is $589.20 (the $491 guideline times 1.2).

This rule explains a lot of approvals that look surprising at first glance. A DTI of 45% is not a dead end if your leftover income is strong.

What if you fall short?

A shortfall does not end the process. The regulation says that if your DTI is 41% or less and you do not meet the residual income standard, the loan may be approved with justification by the underwriter’s supervisor, addressing specific compensating factors. The regulation lists examples:

• Excellent long-term credit
• Conservative use of consumer credit
• Minimal consumer debt
• Long-term employment
• Significant liquid assets
• Down payment or equity in the property
• Little or no increase in shelter expense
• Military benefits
• Satisfactory homeownership experience
• High residual income or a low DTI
• Continuing tax credits and the tax benefits of home ownership

The purchase price may also be considered in the final decision.

Practical ways to improve your numbers

You have more control than you might think before you apply:

• Pay off or pay down installment debts. A car loan with a few payments left is a good target, since the monthly payment counts as an obligation.
• Choose a smaller or lower-cost home. Both the payment and the square footage-based maintenance estimate come down.
• Shop the whole payment, not just the rate. Property taxes, insurance and HOA fees all reduce your leftover income, and each is part of PITI.
• Add a qualifying co-borrower’s income. Additional income may help, though household size and obligations also change the guideline, so ask for a full recalculation.
• Document your strengths. Savings, a long job history and a clean payment record are the compensating factors an underwriter can cite.
• Use an affordability check early. Our conventional affordability calculator helps you see how a payment fits your budget, and we can walk you through the VA version of the numbers.

Our perspective

Most borrowers we talk to know their credit score and their income, but few have seen their residual income number before they start house hunting. That is the gap we work to close.

Residual income is not a hurdle designed to keep veterans out. It is a check on whether a payment will fit a real household budget. When you know your number early, you can choose a price range, a region and a loan structure that holds up in underwriting.

Our approach is to review your income, debts, household size and square-footage estimate in a personalized consultation, compare options across lenders, and flag any shortfall before an offer is on the table. Our application is fully online, and our process is built to move toward funding in under 21 days when your file is complete.

If your numbers are close to the guideline, that is not a reason to stop. It is a reason to review compensating factors and the full payment together, with someone who knows how the file will be read.

David Mordue

Get your VA numbers reviewed

If you are a first-time buyer, a veteran moving to a new duty station or a homeowner considering a VA refinance, we can calculate your residual income with you before you apply. We compare rates across lenders, explain each line of the worksheet and keep communication clear from application to closing.

See how a VA purchase works on our VA loans page, then check your rate and start a pre-approval. If you already own a home, you can also look at refinance options on our home purchase and refinance page.

Common mistakes that affect residual income

A few errors come up repeatedly in VA files, and each is easy to avoid:

• Undercounting the household. The guideline rises with every person, so an accurate count works in your favor.
• Forgetting child care. It is a documented obligation in the analysis, so leaving it out creates surprises late in underwriting.
• Ignoring square footage. Two homes at the same price can have different residual income results because maintenance and utilities are estimated by size.
• Opening new credit before closing. A new car loan adds a monthly obligation and lowers the number you are trying to protect.
• Using the wrong region or loan amount table. The guideline columns differ, so confirm which applies to your state and loan size.

FAQ

Is VA residual income required?

Yes. Residual income analysis is one of the two primary VA underwriting standards, along with the debt-to-income ratio. Ordinarily you must meet both, but failing one does not automatically disqualify you if your file shows strong compensating factors.

What is the VA residual income requirement for a family of four?

For loans of $80,000 and above, the guideline is $1,003 in the Midwest and South, $1,025 in the Northeast and $1,117 in the West. These figures come from 38 CFR 36.4340(e). Your loan officer will confirm the table for your loan amount.

What happens if my DTI is above 41%?

You can still qualify. If your residual income is at least 20% above the guideline, the extra second-level review and statement of justification are not required. Otherwise the file may need underwriter justification based on compensating factors.

Does child care count in the calculation?

Yes. The VA training guide says underwriters must consider job-related expenses such as child care. Documented monthly child care costs reduce the income left over, so share them with your loan officer at the start.

Is there a VA income limit?

The VA does not set a maximum or minimum income for the loan. What it sets is the residual income guideline, which depends on your region, family size and loan amount, along with the 41% DTI benchmark.

Sources

• 38 CFR § 36.4340, Underwriting standards, processing procedures, and lender certification
• VA Form 26-6393, Loan Analysis
• VA Home Loans Training Guide