A Guide to VA Residual Income Requirements

What is VA residual income?

VA loan graphicA borrower must have at least $50-$100 more than their new monthly payment for lenders to deem them eligible for a VA loan. This guarantees the borrower will have residual income left over after making their monthly loan payment. After all debts and expenses are paid each month, residual income is the amount left.

What is Residual Income on a VA Loan?

To determine if you have sufficient income to support the new mortgage payment, you
calculate your residual income by subtracting your monthly debts and living expenses from your gross monthly income to determine if you qualify for a VA loan. This will allow the VA to ensure that you have enough money left each month to cover your mortgage payments even if your income changes or you encounter unexpected expenses.

VA Residual Income Guidelines

Veteran and family in fron of their new homeYou must meet several requirements to qualify for a VA home loan, including the residual income requirement. Depending on the size of your family and the location of the home you are buying, this requirement ranges from $400 to $2000 per month.

This is the amount you must have left over each month after paying all your debts and other expenses, such as your mortgage payment, car payment, credit card payments, student loans, and child care expenses. Note that the VA regularly reviews and updates its requirements to keep up-to-date on the latest information.

VA Residual Income Calculation

Animated calculatorCalculate residual income for a VA loan by taking the borrower's monthly income and subtracting their major monthly expenses, such as housing costs, car payments, credit card bills, and student loan payments. Remember that residual income is typically calculated over 12 months, so fluctuating monthly income may affect the calculation.

There is no minimum residual income requirement from the VA, but most lenders want to see at least some positive residual income before approving a VA loan.

For example, if John Doe has a monthly payment of $3,000 and monthly expenses of $500, his residual income would be $2,500 ($3,000 - $500). If John had zero residual income, this would be cause for concern for most lenders, but with positive residual income each month, he should have no trouble qualifying for a VA loan.

VA Residual Income Chart 2022

For home loans under $79,999 and loans over $80,000, the Department of Veterans Affairs (VA) has a residual income requirement. Depending on the loan amount and family size, this requirement changes. For illustration, the VA requires a residual income of at least $5,337 per month for a borrower with a loan amount of $700,000 and a family size of four. After paying all debts and expenses, the borrower must have an annual income of $5,337.

The VA has a residual income required to make sure that borrowers can afford their mortgage payments. The borrower is encouraged to aim for a higher residual income to give themselves more financial flexibility. It is important to note that this is just a minimum requirement.

Lenders will weigh various factors before approving a home loan, including the VA's residual income requirement. Additionally, borrowers must be aware of other conditions like credit score and debt-to-income ratio.

Residual incomes by region

Residual Income Chart for Loan Amounts Less Than $79,999


Residual Income Chart for Loan Amounts Greater Than $80,000

Residual income over 79999

What if I don't meet the minimum VA residual income?

The VA states that even if a potential borrower has a low residual income or high debt ratio, certain compensating factors could help the applicant get a mortgage, including:

  • conservative use of consumer credit,
  • excellent credit history,
  • high residual income,
  • little or no increase in shelter expense,
  • long-term employment,
  • low debt-to-income ratio,
  • military benefits,
  • minimal consumer debt,
  • satisfactory homeownership experience,
  • significant liquid assets,
  • sizable down payment,
  • tax benefits of homeownership.
  • tax credits for child care, and
  • the existence of equity in refinancing loans,

Does My VA Disability Count as Income?

As a disabled Veteran receiving benefits from the Department of Veterans Affairs (VA), you may wonder if your disability payments count as income to qualify for a home loan.

The answer is yes! Any residual income can be used to qualify for a VA home loan. Furthermore, VA does not withhold taxes from disability benefits, and you are not required to report them as income on your tax return. Disability compensation and pension payments for disabilities paid to veterans or their families are also exempt from taxes.

How Does Residual Income Work for VA Loans?

When applying for a VA home loan, it's essential to know how residual income plays a role in the process. Lenders will look at your total monthly residual income to determine if it meets the minimum requirements set by the VA. If your income meets the stipulated conditions, you'll be one step closer to owning your home.

Disabled Veterans should note that their residual income will be considered when applying for a VA loan. If your total monthly residual income is sufficient, you could be on your way to purchasing the home of your dreams.

Can VA Residue Income Be Grossed Up?

The VA allows non-taxable income to be "grossed up by 25%" for residual income.

Rotating question markFAQs About Residual Income on a VA Loan

Q. How important is the VA residual income analysis?

A. The VA residual income analysis is an essential tool for assisting veterans and their families in determining whether they can afford a home. This analysis determines how much a veteran would have each month after paying for their mortgage by considering their monthly income, debts, and other financial commitments. Veterans must use this information to decide whether they can afford a home.

Q. What happens If your residual income or DTI does not meet the VA requirements?

A. If your DTI or residual income does not meet VA requirements, you may still be able to qualify for a VA loan if you have a compensating factor. Compensating factors make up for a deficiency in another area, such as a high DTI but a low debt-to-income ratio. If you do not have any compensating characteristics, you may still be able to obtain a VA loan with a down payment that is equal to or greater than 25% of the home's appraised value.


The VA will raise their home loan residual income requirement to $1,125 in 2022 to ensure veterans can afford their homes and maintain their quality of life. All veterans should budget accordingly and plan for this change.

Recommended Reading

  1. VA Funding Fee: How to Calculate It
  2. VA Loan Gift Funds: How to Use Them to Close on a VA Loan
  3. VA Home Loan: See if You Meet the Income Requirements