VA loans have an income requirement in addition to the more common debt to income ratio, DTI. VA’s Residual Income can affect a veteran’s loan approval, especially at the lower income levels.
VA Residual Income is based on family size and region and loan size:
Table of Residual Incomes by Region
For loan amounts of $79,999 and below
Family Size |
Northeast |
Midwest |
South |
West |
1 |
$390 |
$382 |
$382 |
$425 |
2 |
$654 |
$641 |
$641 |
$713 |
3 |
$788 |
$772 |
$772 |
$859 |
4 |
$888 |
$868 |
$868 |
$967 |
5 |
$921 |
$902 |
$902 |
$1,004 |
Over 5 -Add $75 for each additional member up to a family of seven
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 seven
These Residual Income requirements must be met to obtain VA financing. The residual income is factored by subtracting certain deductions from the gross monthly income. The first step is to determine the correct monthly gross income, which can be difficult for commissioned or for self-employed workers.
The deductions that must be subtracted are:
Federal income tax |
$ |
State income tax |
|
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Monthly FICA (Soc Sec and Medicare) |
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Monthly obligations: |
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New house payment (including tax and insurance) Installment loans |
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Revolving accounts |
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Child support/Alimony |
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Child care costs |
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Other monthly obligations |
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Monthly home maintenance ($0.14 per square feet GLA) |
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|
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Total deductions |
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For DTI ratios over 41%, veterans must exceed the Residual Income requirements by 20%. VA Residual Income should be calculated early in the loan process. Failure to check Residual Income requirements early can jeopardize you home purchase VA loan approval.
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