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VA Residual Income Calculations

In the late 80's, as we became more and more automated, the VA established qualifying ratios and set them at 41%. Prior to that time we approved a VA loan using the Residual income method. Basically this required the LO to calculate the Service Members tax burden and then net out his pay. From the net pay we would subtract his PITI, maintenance fees, and any debt that he had to include alimony or child support and then see how much he had left. The VA publishes this table of required residual income:

Table of Residual Incomes by Region For loan amounts of $80,000 and above
Family Size	Northeast	Midwest	South	West
1	$450	$441	$441	$491
2	$755	$738	$738	$823
3	$909	$889	$889	$990
4	$1,025	$1,003	$1,003	$1,117
5	$1062	$1,039	$1,039	$1,158
over 5	Add $80 for each additional member up to a family of 7.

Key to Geographic Regions Used in the Preceding Tables

Northeast

Connecticut

Maine

Massachusetts

New Hampshire

New Jersey

New York

Pennsylvania

Rhode Island

Vermont

Midwest

Illinois

Indiana

Iowa

Kansas

Michigan

Minnesota

Missouri

Nebraska

North Dakota

Ohio

South Dakota

Wisconsin

South

Alabama

Arkansas

Delaware

District of Columbia

Florida

Georgia

Kentucky

Louisiana

Maryland

Mississippi

North Carolina

Oklahoma

Puerto Rico

South Carolina

Tennessee

Texas

Virginia

West Virginia

West

Alaska

Arizona

California

Colorado

Hawaii

Idaho

Montana

Nevada

New Mexico

Oregon

Utah

Washington

Wyoming

In the West if the SM has a family of four he needs a residual income of $1,117. The VA also states that if the residual income is 120% of the required or $1,340 in this case than the loan may be approved without regard to the ratio no matter how high it is. In Hawaii this is significant as the SM allowances are so high. An Army Major with a wife and 2 children receives a housing allowance of $3124 per month and that is a non taxed benefit!

Posted by Bruce Bourgault, Vice President, Mpro on 06/29/2007 02:49 PM

Comments (19)

va loans, residual income, loan approval, housing allowance

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19 Comments on VA Residual Income Calculations

JUN

2007

I love VA loans. I know only one way to write a contract when the buyer is using a VA loan.

No money down and all closing paid by the seller.

We go to settlement and my VA buyer is reimbursed the POC of appraisal, credit report and home inspection fee.

Best loan in the country.

Aloha Lenn -- Boy I agree. David Kucic and I do this all the time and it is the very best loan ever.

JUN

2007

Bruce-So glad that you posted this information. Last year, one of my VA loans was "saved" because although the buyer did not qualify on the DTI, they were able to qualify on the residual income. I always preach VA and I am frustrated to know that there are a lot of eligible veterans out there that think they are not eligible. All I can say is TALK TO A VA APPROVED LENDER TO FIND OUT FOR SURE!

I agree with Len....VA is the best loan in the country!

Hi David -- Your comment is so valid. Please make sure your Veteran talks to an approved AND a knowledgeable LO

JUL

2007

Howdy Bruce

Congrats on a very good post.

Thanks Dale -- If you ever need an answer on a VA Loan please just ask.

JAN

2008

We just had a very bad experiance with a loan agent from one of the major banks. They kept preaching us DTI had to be 41 percent. They refused to even put our loan to the VA. Our residual income would of allowed the loan based on the above figures. The contract we had on the house said we had to use that lender so the contract was voided. If the above is true why did that loan officer put us through the ringer and refuse to send the loan through to VA. Is there any thing we can do about it either? After reading more about this it has me even more agrivated at them We wasted 6 months of comuting to be shut in the face per say.

To Quick Question - Unfortunately, our beloved Bruce passed away a few months ago. I don't want you to think that your question is being ignored - May I suggest that you go to the homepage, click on your state, and then contact the top few loan officers in your state for answers about financing.

JUN

2008

Very solid information.

AUG

2008

Thanks again, Bruce. I used this table to put a Marine in his home, last week. Your legacy lives forever.

JAN

2009

Everyone—Bruce would be pleased to know his work is still being put to good use tto help those who qualify to receive the benefits of having a VA home loan. If you have any questions in the future concerning VA loans please contact me, Linda Bourgault (lulugraphix), via email or phone and I will be happy to assist you.

JUN

2009

My Mentor told me...Dane you need to have a SYSTEM if you want to become succesful. I said ok what kind of system should I have. He just said make sure it is a S.Y.S.T.E.M.= Save Yourself Time Energy and Money. I have found a simple system that I have had my business partners in real estate use that has allowed them to create a monthly residual. And it is simple! I took time to learn it and now have perfected this system...I definantly save time energy and money doing this everytime I can, use this and you can seamlessly impliment it and start seeing instant results.

Who here has considered MAKING A RESIDUAL MONTH AFTER MONTH RATHER THAN A ONE-TIME PAYOUT OUT JUST ON SALES COMMISION ALONE? I can help you use a system that will pay you something continually. I have Brokers and Agents who make more in residual getting paid month after month on doing something once than the commisons from selling homes each month.

Stern_partners@yahoo.com

AUG

2009

Thanks Bruce for posting this. You don't know how many times I have come back to this for reference. Thanks again.

SEP

2009

I have a disabled vet who very much wants into a home. THe DTI is over 45% so I am required to bump up the residuals to 120%, I am $100 shy with the maintence on sq. ft. required. I have already removed the Funding Fee. Is there any thing I am not seeing that will help when it goes to underwriting?

Angela,

I have forwarded your question to a VA expert who can answer this question. I will send it to you as soon as I hear back from him. I can usually answer these questions because I learned so much from Bruce, but I'll feel better having another expert support what I "think" the answer may be.

Thank you.

FEB

2010

I am currently doing a VA loan for the house of my dreams. The previous owner has never filed for exemptions on the property taxes. When this is figured in, my DTI is actually 42.29% which is over 41%. Is residual income something that would help me in this case?

Please contact David Kucic at hawaiikucic@gmail.com

He is an expert with VA loans and should be able to answer your question. My husband, Bruce, is deceased, but I try to help people with VA home loans whenever possible. However, I haven't been involved with VA loans for several months. Therefore, I believe David will be the best person to answer you question(s). Good luck!

I have emailed him and I sincerely thank you so much for the information!

DEC

2010

We have some friends that are planning on buying a house. They already have used the VA for their first home and qualify to purchase a second due to a change in station. They are telling us that the VA is requiring $10,000 in their bank account in order to approve funds. Is this correct?

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Bruce Bourgault, Vice President, Mpro

Honolulu, HI

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