VA Residual Income
VA Residual Income: What It Is, Why It Matters, and How to Pass
VA residual income is the money left over each month after your fixed expenses. The VA uses it to check if a loan payment is safe for your household.
If your leftover cash meets the VA guideline for your family size and region, you pass this test. If you’re close, the JD.Mortgage team at PRMG can help you structure the file to qualify.
What Is VA Residual Income?
Residual income is the amount of money left after you pay your fixed monthly costs.
Think of it as your “leftover” cash to cover food, gas, childcare, clothing, and life’s surprises.
The VA sets a minimum target based on your household size and the region you live in. Meet or exceed that target and you pass this part of VA eligibility.
Residual income is different from debt-to-income (DTI). DTI looks at the ratio of debt to gross income.
Residual income looks at your actual dollars left. The VA values this because dollars buy groceries, not ratios.
Why the VA Cares About Residual Income
- Safety first: It helps make sure your new payment is sustainable.
- Household focus: Bigger families need more left over. The table adjusts for that.
- Real-world cushion: Residual income builds room for rising costs and emergencies.
Because this test looks at real dollars, it can approve borrowers who might have a higher DTI but still keep enough money after bills to live comfortably.
How VA Residual Income Is Calculated
The basic steps
- Start with gross monthly income.
- Subtract your housing payment (PITI): principal, interest, taxes, insurance, and HOA/condo dues if any.
- Subtract all monthly debts on your credit report and court-ordered payments.
- Subtract all monthly tax/fica/medicare withholdings on your LES/paystub.
- Subtract utility allowance (the VA uses a standard figure even if utilities are included elsewhere).
- What’s left is your residual income.
What counts as “debt” here?
- Auto, student, personal loans, credit cards (minimums), HELOC payments
- Child support, alimony, and other court-ordered payments
- Any new payment created by the loan (for example, a Lightning Equity Hybrid HELOC if combined)
What can be excluded?
Some installment debts with fewer than 10 payments left can be omitted, subject to VA guidelines and underwriter review.
When in doubt, our team reviews each line item and documents support.
Residual Income Minimums by Region (Loans of $80,000 and Above)
Find your household size and region to see the minimum dollars you should have left each month after fixed expenses.
| 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 |
| Over 5 | Add $80 for each additional member up to a family of 7. | |||
Region key
Connecticut, Maine, Massachusetts, New Hampshire, New Jersey, Pennsylvania, Rhode Island, Vermont
Explore Loan Options (Oct 13th, 2025)Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota, Missouri, Nebraska, North Dakota, Ohio, South Dakota, Wisconsin
Alabama, Arkansas, Delaware, District of Columbia, Florida, Georgia, Kentucky, Louisiana, Maryland, Mississippi, North Carolina, Oklahoma, Puerto Rico, South Carolina, Tennessee, Texas, Virginia, West Virginia
Alaska, Arizona, California, Colorado, Hawaii, Idaho, Montana, Nevada, New Mexico, Oregon, Utah, Washington, Wyoming
Explore Loan Options (Oct 13th, 2025)Note: These figures apply to loan amounts of $80,000 and above. Final approval follows the full VA guideline and underwriter review.
Want a fast estimate based on your numbers? Use the Mortgage Calculator, then the JD.Mortgage team will complete a precise residual income review for your file.
Ways to Pass If You’re Close
1) Adjust the debt picture
- Pay off or pay down a small balance loan or card to remove a monthly minimum.
- Consolidate where allowed to reduce total monthly payments.
- Document debts with < 10 payments left for possible omission when the guideline allows.
2) Optimize income documentation
- Verify variable income: overtime, bonus, BAH/BAS, or other eligible sources with required history.
- Use non-taxable income gross-up when permitted to boost qualifying income.
- Include eligible household income per VA rules even if not on the loan, when appropriate.
3) Tweak the loan structure
- Lower the rate with seller credits or points to cut the monthly payment.
- Use a temporary buydown to ease the first years of payments while income rises.
Learn how temporary buydowns work. - Right-size taxes and insurance with accurate quotes and exemptions where applicable.
4) Show real compensating factors
- Strong housing history with similar or higher payments
- Stable job tenure or recent verified income growth
- Limited consumer debt use and low utilization
- Cash reserves, even modest, to show cushion
Manual Underwriting & Compensating Factors
Not every file runs through an automated system cleanly. That’s fine. The VA allows manual underwriting, which reviews your full story.
When residual income is close, compensating factors can make the difference. We specialize in these reviews.
See our guide on VA Loan Manual Underwriting.
Remember: the VA’s 100% or 125% “benchmark” for residual income in some lender overlays is a compensating factor, not a hard rule from the VA.
The focus is safe, sustainable homeownership supported by your actual budget.
How the JD.Mortgage Team Helps
- Up-front modeling: We map your PITI, debts, and utility allowance to show your exact residual income.
- Structuring options: Points, credits, buydowns, and smart payoffs if it improves the monthly picture.
- Documentation: We verify and gross-up eligible non-taxable income, and include allowable sources like BAH.
- Manual expertise: If AUS is tight, we prepare a compensating-factor package for manual underwriting.
Explore the VA Loan program and
other loan options.
When you’re ready, Contact the JD.Mortgage team.
FAQs: VA Residual Income
Is residual income the same as DTI?
No. DTI is a percentage of debt compared to income. Residual income is the dollars left after fixed costs. The VA uses both, but residual income tells the “can you live on what’s left” story.
Explore Loan Options (Oct 13th, 2025)How does family size change the requirement?
Bigger households need more leftover money. The VA table increases the minimum as your family size grows.
Do all regions have the same requirement?
No. The table varies by region to reflect cost of living. We’ll apply the right region for your property.
Can non-borrowing spouse debts affect residual income?
In some community property states, yes. We review the state rules and your file to include what’s required and omit what’s allowed.
Explore Loan Options (Oct 13th, 2025)Can I omit loans with fewer than 10 payments left?
Often yes, with the right documentation and when it doesn’t create undue risk. We’ll evaluate each account and support the file.
What if I’m slightly below the guideline?
We look for compensating factors and smart structuring: rate credits, buydowns, small payoffs, income verification, and manual underwriting when it makes sense.
Do temporary buydowns help residual income?
They can reduce the initial payment, which increases dollars left over. We’ll compare permanent points vs a buydown using your numbers.
Explore Loan Options (Oct 13th, 2025)Where do I start?
Run a quick estimate with the Mortgage Calculator, then
Contact the JD.Mortgage team.
What This Means for You
If you’re using a VA Loan, residual income is a key green light. It measures your real-life budget after bills.
Close to the line? We’ll help you structure the loan, verify income the right way, and use compensating factors to present a strong file.
Ready to see where you stand?
Estimate your payment and
Contact the JD.Mortgage team.
Ready to Take the Next Step?
Connect with the JD.Mortgage team to review your options, compare programs, and build a custom path to homeownership.
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