The Real Approval Gate on Every VA Loan
Residual income is the cash left in your pocket after the mortgage, taxes, and major debts are paid. The VA cares about this number more than your DTI — and most lenders won’t tell you why. Here’s the chart, the math, and what to do if you fall short.
Most loan programs ask one question: what percent of your income goes to debt? VA loans ask a second one — how much money is left over after everything is paid? That second number is residual income, and it’s the reason VA loans have lower foreclosure rates than conventional loans.
It’s also the reason a veteran with a 55% DTI can still get approved when a conventional borrower at 45% gets denied. The VA built this safety net so veterans aren’t house-poor. Used right, it’s the most borrower-friendly underwriting rule in the mortgage business.
Last updated: October 9, 2026
Guidance reference: VA Pamphlet 26-7, Ch. 4 (VA updated August 26, 2026); Ch. 6 (VA updated July 9, 2026)
What Is VA Residual Income?
Residual income is the dollar amount left in your monthly budget after subtracting your mortgage payment, taxes, all monthly debts, and a utility estimate. It’s a real-cash test — not a percentage.
As of Q3 2026 (September 2026): VA’s residual income guide is the money that should be left each month after your bills. For loans of $80,000 or more, it is $1,117 (West), $1,025 (Northeast), and $1,003 (Midwest and South) for a family of four. For a household of one, it is $491 / $450 / $441 (VA Pamphlet 26-7, Ch. 4, residual income tables). These amounts are 5% lower for active duty and military retirees. VA uses 41% as a check point for how much of your income goes to debt payments. Above 41%, we take a closer look at your file. That closer look is not needed if the money left over each month after your bills is at least 20% above VA’s chart. If it is not, your loan can still be approved when a supervisor signs a note that lists the strengths in your file (VA Pamphlet 26-7, Ch. 4). VA’s estimate for upkeep and utilities is $0.14 per square foot of living area per month (VA Pamphlet 26-7, Ch. 4).
VA says the money left over each month after your bills (residual income) matters more than your debt-to-income ratio. That ratio is how much of your monthly income goes to debt payments, and VA calls it a guide. A veteran with a higher ratio can still qualify if the money left over is strong. A veteran with a low ratio can still be turned down if the money left over is too thin.
Why it matters: conventional loans lean hard on the debt ratio. VA gives more weight to the cash you have left to live on, which protects the veteran. That is why a borrower with 50% or more of income going to debts, but strong money left over, has a real path to approval that does not exist on any other loan program.
VA Residual Income Chart by Region and Family Size (2026)
VA divides the country into four regions. Each region has its own residual income guide, the money VA expects to be left each month after your bills, and it goes up with family size. The numbers below come straight from VA Pamphlet 26-7, Chapter 4, and apply to loans of $80,000 or more, which covers nearly every purchase loan today.
Loans of $80,000 or More — VA’s Monthly Residual Income Guide
| 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 | $1,062 | $1,039 | $1,039 | $1,158 |
| 6+ | Add $80 for each extra person, up to a family of 7 | Add $80 for each extra person, up to a family of 7 | Add $80 for each extra person, up to a family of 7 | Add $80 for each extra person, up to a family of 7 |
Loans Below $80,000 — VA’s Monthly Residual Income Guide
| 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 |
| 6+ | Add $75 for each extra person, up to a family of 7 | Add $75 for each extra person, up to a family of 7 | Add $75 for each extra person, up to a family of 7 | Add $75 for each extra person, up to a family of 7 |
See how residual income plays out for Colorado Springs buyers.
Which Region Is Your State?
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
These are VA minimum thresholds. Many lenders apply overlays that require more — sometimes 20% above the chart even at standard DTI levels. As a no-overlay lender, The JD.Mortgage Team uses the VA’s actual numbers, not made-up bank policies on top of them.
Lender told you that you need 20% above the chart even at low DTI? That’s an overlay — not a VA rule. Let’s run your file against actual VA guidelines.
What “No Overlays” Means
An overlay is a credit rule a lender adds on top of VA’s. We don’t add them — we underwrite to VA guidelines. Separate from underwriting, every VA loan must also be eligible for sale or securitization, and Ginnie Mae sets pooling requirements that apply to all lenders and that no lender can waive. Refinances in particular carry seasoning requirements under Ginnie Mae that are broader than VA’s. We’ll tell you upfront if one applies to you.
How to Calculate VA Residual Income
The formula is straightforward, but the inputs trip people up. Here’s the exact calculation underwriters use.
The Formula
Gross monthly income minus federal/state/social security taxes minus full PITI payment minus all monthly debts minus utility/maintenance estimate equals residual income.
The Step-by-Step
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1Start with gross monthly income. Base pay, BAH, BAS, VA disability, self-employment, rental income — anything stable and likely to continue.
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2Subtract federal, state, and Social Security taxes. Underwriters use estimated tax tables based on your gross income and filing status.
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3Subtract the full PITI payment. Principal, interest, property taxes, homeowners insurance, HOA dues, and mortgage insurance if any.
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4Subtract all monthly debts. Auto loans, credit card minimums, student loans, child support, alimony — even court-ordered obligations that don’t appear on credit.
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5Subtract the utility/maintenance estimate. The VA uses $0.14 per square foot of living space. A 2,000 sq ft home equals $280 per month. This figure is fixed — actual utility costs don’t change it.
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6Compare to the chart. Match your region, family size, and loan size. Active duty or retired from the service? Take 5% off. The chart is a guide, not an automatic yes or no.
Colorado Springs Example — Family of 4, West Region
Veteran buyer, family of four, buying a 2,000 sq ft home in Colorado Springs:
Gross monthly income (base + BAH): $7,800
Estimated taxes: −$1,200
Full PITI on $475K loan: −$3,400
Auto loan + credit cards: −$650
Utility estimate (2,000 sq ft × $0.14): −$280
Money left over each month (residual income): $2,270. That is well above VA’s West region guide of $1,117 for a family of 4.
Most files in Colorado Springs pass residual easily because BAH covers a big chunk of housing costs. The files that fail tend to be ones where the buyer stretches into a payment that pulls residual below the chart — even when the DTI still looks OK on paper.
How VA Calculates Residual Income, Line by Line
VA does the math on one form. It is called the Loan Analysis, VA Form 26-6393. We use it when we review your income and credit, like on a home purchase. Most VA streamline refinances (IRRRLs) do not need it. Residual income, the money left each month after your bills, is line 43. VA labels it “Balance Available for Family Support.” That is why some people call this the family support chart. Same number. Same table.
Here is the form, top to bottom, using the same Colorado Springs family of four from above. West region. Loan over $80,000. The chart says they need $1,117.
| Form line | What it is | Example |
|---|---|---|
| Line 31 | Gross monthly income from work | $7,800 |
| Line 32 (federal tax) and other deduction lines | Federal tax, state tax, Social Security or retirement, other deductions | − $1,200 |
| Line 40 | Net take-home pay | $6,600 |
| Line 41 | Minus the debts listed in Section D (car, cards, student loans, child support) | − $650 |
| Line 42 | Total net effective income | $5,950 |
| Line 43 | Minus total shelter expense from line 21: principal, interest, taxes, insurance, HOA, plus maintenance and utilities | − $3,680 |
| Line 44 | Balance available for family support — this is residual income | $2,270 |
| Guideline | The chart number for West, family of 4, loan over $80,000 | $1,117 |
$2,270 is more than $1,117. This file passes residual income with room to spare. That room matters. It is the first thing we point to when a file has a low score or a past late payment, because a real underwriter reads it. Every region and family size is on the 2026 VA residual income chart.
Three things people get wrong on this form
One: taxes come out before anything else. Residual is an after-tax number. Two: maintenance and utilities are part of shelter expense on line 21, not a debt. Three: if income was grossed up for the debt ratio (tax-free VA disability, for example), VA’s own guidance says the gross-up comes back out before residual is figured. Residual uses the real, spendable amount.
The VA Maintenance and Utility Chart
VA does not use your real power bill. It uses an estimate tied to the size of the home. The standard is 14 cents per square foot of living area, per month. Bigger house, bigger deduction. The number goes on the shelter expense side of the form, so it lowers residual income dollar for dollar.
| Living area (sq ft) | Monthly maintenance and utilities |
|---|---|
| 1,000 | $140 |
| 1,200 | $168 |
| 1,500 | $210 |
| 1,800 | $252 |
| 2,000 | $280 |
| 2,200 | $308 |
| 2,500 | $350 |
| 3,000 | $420 |
| 3,500 | $490 |
Living area means the gross living area on the appraisal. Garages and unfinished basements do not count. VA’s own example: a 1,500 square foot home with a 1,500 square foot unfinished basement is $210, not $420. On a tight file, a 2,400 square foot home costs you $336 a month of residual. A 1,800 square foot home costs $252. That $84 gap has decided approvals.
Who Counts in Your Family Size
The chart runs on family size, so this matters. VA’s rule is simple: count everyone who lives in the home. Not just the people on the loan.
Counts
You. Your spouse, even if they are not on the loan. Your children. A parent who depends on you and lives with you. Anyone else in the household you support.
Can be left out, with proof
A spouse who is not on the loan and fully supports themselves. We document their income. A foster child when foster care payments come in for that child. Anyone else, we show they are not dependent on you.
Why it matters: in the West, VA’s chart for a family of 4 is $1,117. For a family of 3, it is $990. If your spouse works and is not on the loan, that one document can move the line by $127 a month. It matters most when more than 41% of your income goes to debt payments. Then we take a closer look, unless your money left over each month is at least 20% above the chart. Without that cushion, a supervisor can still approve the loan with a signed note. We see it every month on Colorado Springs VA loans.
What Counts as Income for VA Residual Income?
Income counts when it can be proven, is steady, and should keep coming. Child support, alimony, and income like a pension, dividends, or a trust must be likely to last at least 3 years after closing. Here’s the breakdown.
Income That Counts
- Military base pay
- BAH (Basic Allowance for Housing)
- BAS (Basic Allowance for Subsistence)
- VA disability income
- Military retirement pay
- Self-employment income (2-yr average)
- Rental income (how it counts depends on the property)
- Spouse’s income (if co-borrower)
- Social Security and pensions
- Child support (with continuance proof)
Income That Doesn’t Count
- One-time bonuses or windfalls
- 401(k) or IRA disbursements (in most cases)
- Child support, alimony, or pension income that ends within 3 years. A pension that ends sooner may still help cover debts that end in 6 to 24 months.
- Cash gifts from family
- Side income that isn’t documented
- Unverified rental cash
- Boarder income (most cases)
- Stipends and reimbursements
Important Note on Tax-Free Income
Some income is not taxed, like BAH. When we figure how much of your income goes to debt payments, we may count tax-free income at 125% of the real amount. For the money left over each month (residual income), VA does not allow that. Tax-free income counts at its real amount there.
Why does this matter? Because tax-free income is still better for residual than taxable income. There’s nothing to subtract for taxes. A veteran with $3,000 in disability pay puts $3,000 against residual. A veteran with $3,000 in W-2 wages might net $2,400 after taxes against residual. That’s a real advantage — it just shows up at the bottom of the calculation, not the top.
What Happens If You Don’t Meet VA Residual Income?
A residual income shortfall doesn’t automatically kill the file. The VA’s own handbook tells lenders to weigh residual income alongside other credit factors — not as a hard cutoff.
When residual is short, the loan can still be approved with documented compensating factors. The trick is having a lender willing to work the file. Big banks and high-volume retail shops typically aren’t. As a no-overlay lender, The JD.Mortgage Team works these files every week.
What Can Help If You Are Short, and What Cannot
Cash Reserves
3 to 6+ months of PITI in liquid savings. Strongest single compensating factor.
Long Time at One Job (Not a Fix for Low Leftover Money)
Years at the same job or in the same field, with rising pay, can be a strength. But VA says it does not make up for being short on money left over each month after your bills. A good amount of money in savings can help.
Minimal Debt
Few or no installment loans, low credit utilization, no recent late payments.
Strong Credit History
Higher credit score, long credit history, satisfied housing payments at or above the new PITI.
Family Members Who Pay Their Own Way
VA counts everyone who lives with you in your family size. Someone can be left out only if proven income fully pays their way. That income cannot be used to qualify for the loan. One example is a spouse who is not on the loan and earns enough to support themselves. Another is a child whose regular child support or foster care payments fully cover them.
Tax-Free Income
VA disability and BAH boost net cash flow because there’s no tax bite to subtract.
VA Residual Income vs. DTI — Which Matters More?
Both matter. Neither stands alone. But on a tight file, residual income carries more weight because it’s the cash test — and that’s what the VA actually cares about.
DTI (Debt-to-Income)
A percentage. Total monthly debt payments (including new PITI) divided by gross monthly income.
VA flags files above 41%, but does not turn them down for that alone. Above 41%, we take a closer look at your file. That step is skipped if your money left over each month is at least 20% above VA’s chart. If it is not, a supervisor can still approve the loan with a signed note that lists the strengths in your file.
Residual Income
A dollar amount. The actual cash left over each month after taxes, housing, debts, and utilities.
Compared to a regional/family-size threshold. The VA’s primary safety net for the borrower.
High DTI but Strong Residual Income — Can You Still Qualify?
Yes. This is one of the most powerful parts of how VA loans are reviewed. When more than 41% of your income goes to debt payments, we take a closer look at your file. That step is not needed if your money left over each month is at least 20% above VA’s chart. If it is not, your loan can still be approved when a supervisor signs a note that lists the strengths in your file.
Real example: a family of four in the West region needs $1,117 residual. If their DTI is 50% but their residual is $1,400 (which is 25% above $1,117), the file works. Most lenders won’t touch a 50% DTI VA loan because of overlays. As a no-overlay lender, this is exactly the kind of file we close.
High DTI but strong residual income? Most lenders pass on these files. We close them. Let’s see what your numbers actually say.
VA Residual Income for Veterans with Disability Income
If you receive VA disability compensation, you have a structural advantage on residual income — and most loan officers don’t fully explain why.
VA disability income is tax-free. For DTI calculations, lenders typically gross it up by 25% to show what the equivalent pre-tax wage would be. That bigger grossed-up number reduces your DTI ratio, which helps qualification on paper.
For residual income, grossing up isn’t allowed. But disability income still produces a stronger residual outcome than taxable wages because there’s nothing to subtract for taxes. The full disability payment flows directly into the residual calculation.
There’s also the funding fee benefit: veterans receiving service-connected disability compensation are exempt from the VA funding fee, which reduces the loan amount and the PITI — which improves residual income further.
For a disabled veteran, the math stacks: tax-free income, no funding fee, often a lower payment, and stronger residual. The VA loan is built for this borrower more than any other.
VA Residual Income FAQ
What is the minimum VA residual income?
It depends on region and family size. For a family of four on a loan above $80,000: $1,025 in the Northeast, $1,003 in the Midwest and South, and $1,117 in the West. See the full chart above for all combinations.
Does VA disability count toward residual income?
Yes. VA disability is fully counted. It’s tax-free, so the entire amount flows into the residual calculation without a tax deduction. The VA does not allow grossing up tax-free income for residual income purposes — but it does for DTI. Either way, disability income is one of the strongest income types for a VA loan.
Can I get a VA loan if I fail residual income?
Possibly. VA tells lenders to weigh the money left over each month after your bills (VA calls this residual income) with the rest of your file. It is not a hard cutoff. Strengths in your file can make up for coming up a little short, but only if they fit that weak spot. A good amount of money in savings, strong credit, and little other debt can help. A long time at the same job does not. Big banks rarely take on these files. Lenders that add no extra rules on top of VA’s rules do.
How is residual income different from DTI?
DTI is a percentage — the share of your income that goes to debt payments. Residual income is a dollar amount — the actual cash left after everything is paid. DTI tells the lender if you’re stretched. Residual income tells the lender if you can still buy groceries after the mortgage is paid.
Does BAH count as income for VA residual income?
Yes. BAH is fully counted as stable, continuing income for active-duty service members. Like VA disability, it’s tax-free and flows into the residual calculation at face value. It’s one of the main reasons active-duty residual income is typically strong.
What utilities estimate does the VA use?
$0.14 per square foot of living area, per month. A 1,500 sq ft home equals $210. A 2,500 sq ft home equals $350. This figure is fixed by the VA and applies regardless of actual utility costs. It also covers a maintenance estimate, not just utilities.
What is the 20% residual income rule?
The 20% rule is a shortcut, not a must. VA uses 41% as a check point, not a limit. If more than 41% of your income goes to debt payments, we take a closer look at your file. That closer look is not needed if the money left over each month after your bills is at least 20% above VA’s chart. If it is not, your loan can still be approved when a supervisor signs a note that lists the strengths in your file. This helps files with higher debt get approved when other loan programs would turn them down.
How is monthly residual income calculated for a VA loan?
Start with your monthly income before taxes. Subtract federal tax, state tax, and Social Security. Subtract your monthly debts. Subtract your full house payment plus VA’s upkeep and utility estimate. What is left is your residual income, the money you have each month for family costs. VA puts it on line 43 of the Loan Analysis form. Then it is compared to the chart for your region and family size.
What is the VA maintenance and utility chart?
It is the estimate VA uses for upkeep and utilities. The standard is 14 cents per square foot of living area each month. A 2,000 square foot home is $280. It counts as part of shelter expense, so it lowers residual income.
What is the VA family support chart?
It is the residual income chart. Residual income is the money you have left each month after your bills. On VA’s Loan Analysis form, it is labeled “Balance Available for Family Support” on line 43. Same table, different name.
Does my spouse count in family size if they are not on the VA loan?
Yes, by default. VA counts everyone in the household. A spouse who fully supports themselves can be left out if we document their income.
Is VA disability grossed up for residual income?
No. Grossing up tax-free income only helps the debt ratio. For residual income, VA’s guidance is to take the gross-up back out and use the real amount.
Related VA Loan Resources
VA Loan Structure
Using Your VA Loan Before Separation
No-Overlay VA Lender
2026 Residual Income Chart
View All VA Loan Pages
Not Sure If Your Residual Income Qualifies?
I run VA scenarios every day — including the edge cases most lenders turn away. High DTI with strong residual. Disability income files. Manual underwrites. Let’s look at your actual numbers and build a real plan.
Source: JD.Mortgage Team at PRMG, VA Loan Residual Income: Requirements, Charts & How to Calculate, updated October 2026, https://jd.mortgage/va-loans/va-residual-income/
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