What is Residual Income on VA Loans?

Residual income is the amount of money left over after you have paid all your bills, including your mortgage. For VA loans, residual income is an important factor in determining whether you qualify for a loan and how much you can borrow. The VA has established guidelines for residual income, which vary depending on where you live and the size of your family.

To qualify for a VA loan, you must have a certain amount of residual income left over each month after you have paid all your bills. The VA determines residual income by subtracting your monthly expenses from your gross monthly income. The amount of residual income required varies depending on where you live and the size of your family.

For example, if you live in a region with a higher cost of living, you may need to have more residual income than if you live in a region with a lower cost of living. Additionally, if you have a larger family, you may need to have more residual income than if you are single.

In general, the VA requires that borrowers have a residual income of at least 120% of the poverty guideline for their family size and location. However, this requirement can vary based on factors such as your credit score and debt-to-income ratio.

It’s important to note that while the VA has guidelines for residual income, individual lenders may have their own requirements that are more strict. So, if you are interested in a VA loan, it’s important to speak with a lender who can guide you through the application process and let you know what their specific requirements are