VA Residual Income Chart 2024 - VA Home Loans

It is essential to comprehend residual income while determining one's eligibility for a VA loan. This comprehensive study explores the nuances of VA residual income and provides potential homeowners with insightful information.

The VA residual income calculator is a valuable tool that helps comprehend the financial criteria for receiving a VA loan. By examining the requirements, illustrations, and techniques for computation, this resource seeks to demystify residual income for VA loans.

Through state-specific charts and general guidelines, people may work through the complexities of residual income calculation and make sure they satisfy the VA's requirements. This thorough tutorial helps you understand the VA residual income chart and the importance of grossing up income to make well-informed choices on your eligibility for VA loans.

Understanding Residual Income for VA Loans

When applying for a VA home loan, knowing how residual income plays a role is essential. 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.

VA Loan Residual Income Requirements

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. The VA regularly reviews and updates its requirements to keep up-to-date on the latest information.

How to Calculate VA Residual Income

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.

2024 VA Residual Income Chart

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 ensure 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 know conditions like credit score and debt-to-income ratio (DTI).

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

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

Compensating Factors in VA Loan Approval

If the VA residual income or DTI (debt-to-income) ratio does not meet the requirements, it could affect the borrower's ability to obtain a VA loan. Residual income is the amount left over each month after paying essential expenses, such as housing, food, and transportation.

The VA requires borrowers to have a certain residual income level to ensure they can afford their mortgage payments. DTI is the percentage of the borrower's income to pay their debts, including the mortgage.

If the borrower's DTI ratio is too high, they have too much debt and may have trouble making mortgage payments. If the borrower does not meet the requirements for either VA residual income or DTI, they may need to improve their financial situation before being eligible for a VA loan.

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 expenses,
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,

Including VA Disability in Loan 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.

Grossing Up Non-Taxable Income in VA Loans

The VA allows non-taxable income to be "grossed up by 25%" for debt-to-income analysis but not for residual income analysis.

Maximizing Financial Potential with VA Residual Income

In conclusion, VA residual income is a promising opportunity for those looking to earn money on the side or even replace their full-time job. It offers flexibility, freedom, and the potential to earn passive income. By leveraging their skills and expertise, virtual assistants can create a steady stream of revenue that continues to flow even when they are not actively working.

Building a thriving VA business with residual income is possible with the right strategies and dedication. So why wait? Start exploring this lucrative path today and unlock your financial potential as a virtual assistant.

Take the first step towards financial independence and earn residual income as a VA! Understanding your VA residual income can be valuable when financing a VA mortgage. You can ensure enough discretionary income to cover unexpected expenses with the proper residual income.

SOURCE:
Chapter 4. Credit Underwriting