Understanding VA residual income limits is crucial for VA loan approval. Residual income is the cash left after fixed expenses, ensuring borrowers aren’t financially strained. Unlike debt-to-income (DTI), it considers absolute dollars remaining. VA guidelines vary by region and household size, with specific income thresholds. Falling short can impact loan approval, though strong credit or savings may help. Knowing your numbers upfront prevents surprises in the loan process.
What Is VA Loan Residual Income?
Residual income is how much cash is left in your pocket every month after you’ve paid your fixed debts. Think mortgage, property tax, insurance, and bills you can’t skip on. The VA wants to make sure you’re not house poor the day you move in. You can pull in $7,000 a month, but if your expenses are wild, you might not get approved.
Key point : This calculation is different from your debt-to-income (DTI). DTI looks at a % of total debt vs income. Residual income looks at cold hard dollars remaining.
Why Do Residual Income Guidelines Vary By Region?
Because stuff costs more depending on where you live. Groceries, gas, rent, utilities—they all hit differently in California vs Kentucky.
The VA split the U.S. into 4 regions:
- West
- South
- Northeast
- Midwest
Those regions then have baseline income levels tied to how many people are in the household (spoiler: yes, your kid counts). The more people you’re supporting, the more money you need to have left each month.
VA Loan Residual Income Chart (2024 Baseline)
If you’re looking to buy with a VA loan, here’s the residual income guidelines based on loan size, region, and number of people in the household.
| 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 |
| Each Additional | $80 | $80 | $80 | $80 |
If you’re buying a home over $80,000 (pretty much all of us), this chart is your go-to.
Anything lower than the required number? Big problem for VA loan approval.
Example: West Region, Family of 4
Say you’re a veteran living in San Diego with a family of four.
Your monthly bills add up, but you bring in enough to qualify. You need $1,117 left over after all your mortgage+fixed expenses.
Pretty strict, but the point is to make sure you’re not wiped out every month.
How To Calculate Your Residual Income
If you’re trying to see where you stand, here’s what your lender will subtract before getting that number:
- Monthly mortgage payment (principal + interest)
- Property taxes
- Homeowner’s insurance
- HOA dues (if applicable)
- Estimated utility costs
- Monthly debts (car loans, student loans, credit cards)
- Child care costs
Then they subtract the total from your gross monthly income.
That leftover money is your residual income.
Why It Matters If You’re Close to the Number
Meeting residual income requirements proves to the lender you’re not maxing yourself out. Even if your debt-to-income ratio looks good, you can still get a “no” if your residual’s off. This is where folks get blindsided. Like you’re cleared all the usual boxes—credit, job history, DTI—but residual income throws you off. Side note: if you’re falling short by less than $80 to $100, some lenders may still approve you. But you’ll need strong compensating factors—like a high credit score or cash reserves. If you’re not sure you’re in a good spot, check out more advice on how to prep for a VA loan on our
Common VA Residual Income Myths
- “I’m good because my DTI is low” ➝ Nope. You need both low DTI and enough leftover cash.
- “My kids don’t count in household size” ➝ They do. Everyone you support financially gets factored in.
- “I live cheap, so they’ll cut me slack” ➝ The VA uses national utility standards, not your actual bills.
- “It’s just a guideline; I can still get approved” ➝ If you’re way below the number, it’s a deal breaker. Not a suggestion.
FAQs
What happens if I’m $50 short on residual income?
It depends. If your credit score is strong, and you have savings or other low-risk factors, a lender might approve it. VA underwriting guidelines make room for compensating factors.
Do adults in my household who don’t pay rent count?
Yup. If they’re dependent on you—financially or otherwise—they’re included in the family size count.
Can I lower my debt to help with residual income?
Yes. The lower your debt load, the less is subtracted before calculating residual
Conclusion
Understanding VA loan residual income guidelines is essential for securing approval. Residual income ensures that you have enough funds left after paying fixed debts, preventing financial strain. These guidelines vary by region and household size, with higher requirements for larger families and costlier regions. Meeting these standards proves you won’t be overwhelmed by expenses. While some flexibility exists for small shortfalls, it’s crucial to prepare in advance to meet these requirements and avoid surprises during the loan process