By Ryan Singer, NMLS #1520306 · October 29, 2026Most loan programs care about one ratio: how much of your gross income goes to debt. VA looks at that too, but it also asks a more practical question. After the mortgage, the bills and the taxes, is there enough money left each month for your family to actually live? That leftover is called residual income, and it's the reason I can approve a lot of veterans other lenders turn down.
What residual income actually is
Residual income is your take-home pay minus your new house payment, your monthly debts and a few other fixed costs. Whatever's left over has to cover food, gas, clothes, medical bills and everything else. VA publishes a minimum for that leftover amount based on three things: how big your household is, where in the country you live and how big the loan is.
It's not a suggestion. If you're under the chart, the loan usually doesn't work as a standard VA approval, even with great credit.
The VA residual income charts
These come from VA's Lenders Handbook (VA Pamphlet 26-7, Chapter 4) and the federal regulation behind it, 38 CFR 36.4340. They haven't changed in years. Almost every loan I do is $80,000 or more, so this is the chart that matters for most people.
| 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 |
For a household bigger than five, add $80 per person up to seven. Loans under $80,000 use a slightly lower chart, starting at $382 to $425 for one person, with $75 added per extra person.
The regions follow VA's map. Northeast is CT, ME, MA, NH, VT, NJ, NY, PA and RI. Midwest is IL, IN, IA, KS, MI, MN, MO, NE, ND, OH, SD and WI. South is AL, AR, DE, DC, FL, GA, KY, LA, MD, MS, NC, OK, SC, TN, TX, VA, WV and Puerto Rico. West is AK, AZ, CA, CO, HI, ID, MT, NV, NM, OR, UT, WA and WY.
Who counts in your family size
Everyone in the household who depends on the income counts, including you, your spouse and your kids. This trips people up, because a spouse who isn't on the loan still counts toward family size. A 19-year-old who still lives at home and relies on you usually counts too. Getting this number right matters more than people expect, since going from three to four people in the West adds $127 to the minimum.
How I calculate it on a real file
Here's the basic math I run:
- Start with gross monthly income from everyone on the loan.
- Subtract taxes. Federal and state income tax, plus Social Security and Medicare. Nontaxable income like VA disability doesn't have taxes taken out, which is one reason disability income goes further on a VA loan.
- Subtract the new house payment, meaning principal, interest, property taxes, homeowners insurance and any HOA dues.
- Subtract maintenance and utilities. VA uses a flat 14 cents per square foot of living area from the appraisal. A 1,800 square foot house is $252 a month.
- Subtract monthly debts on your credit report, plus child support and things like childcare you pay so you can work.
What's left is your residual income. Then I compare it to the chart.
A quick example
Say I'm working with a family of four in Arizona, so the West column, and their guideline is $1,117. They make $7,000 a month gross, and taxes take about $1,100, so take-home is $5,900. The new payment is $2,600, maintenance and utilities on 1,800 square feet is $252, a truck payment is $450, credit card minimums are $100 and daycare is $600.
$5,900 minus $4,002 leaves $1,898 a month. That's about 170% of what VA requires. Their debt-to-income ratio is 45%, which would scare off a lot of conventional lenders. On a VA loan, that residual income is a big part of what gets it approved.
Why this matters if your DTI is over 41%
VA's benchmark debt-to-income ratio is 41%. It's not a hard cap. When a file is over 41%, VA's guidelines say the underwriter needs to look harder, and if residual income is at least 20% above the chart, that's usually strong enough to support the higher ratio on its own. In the example above, $1,117 times 1.2 is $1,340, and they cleared it easily.
So when someone tells me another lender said their DTI was too high, residual income is the first thing I check. Lender overlays still apply, and the automated underwriting system gets a say too, but this is real room you don't get on most other loans.
Does residual income apply to a VA refinance?
It depends on which one.
A VA cash-out refinance is fully underwritten, so residual income applies the same way it does on a purchase. That includes the newer cash-out where you're mostly just lowering your rate but taking a little cash.
A VA IRRRL is different. VA doesn't require the lender to underwrite income on a streamline refinance unless the new monthly payment goes up 20% or more, which mostly happens when someone moves from a 30-year to a 15-year. Some lenders still look at it anyway, but on most IRRRLs I do, residual income never comes up. If you're deciding between the two, my IRRRL vs. cash-out breakdown walks through it.
If you come up short
Being a little under the chart doesn't always kill the deal. Here's what I usually look at first:
- Pay off a small debt. Wiping out a $250 car payment with a few months left adds $250 straight to residual income.
- Add income you didn't think counted. A spouse's part-time job, VA disability, a pension, or Guard or Reserve pay can all help if they're documented.
- Look at a smaller payment. A slightly lower price, a lower property tax area or a house with no HOA changes the math fast.
- Double check the tax figure. I've seen files where taxes were overestimated, which made residual income look worse than it was.
Your credit score is a separate question. VA doesn't set a minimum score, and I can do VA loans down to a 500 score at Independence Home Loans. More on that in getting a VA loan with a 500 score.
If you send me your income, your monthly debts and how many people live with you, I can tell you pretty quickly where you'd land on the chart.
Frequently asked questions
What is the VA residual income requirement for a family of four?
For a loan of $80,000 or more, VA's minimum is $1,025 in the Northeast, $1,003 in the Midwest and South, and $1,117 in the West.
Can I get a VA loan with a DTI over 41%?
Often, yes. VA's 41% ratio is a benchmark, not a cap. If your residual income is at least 20% above the VA guideline for your family size and region, that is generally strong enough to support a higher ratio, subject to underwriting.
Does a spouse who is not on the loan count in family size?
Yes. Everyone in the household who relies on the income generally counts toward family size, including a non-borrowing spouse and dependent children.
Does a VA IRRRL require residual income?
Usually not. VA does not require income underwriting on an IRRRL unless the new monthly payment increases by 20% or more, though some lenders still review it.
How does VA estimate maintenance and utilities?
VA uses 14 cents per square foot of gross living area from the appraisal. A 1,800 square foot home works out to $252 a month.
This article is general education, not financial, legal or tax advice, and it is not a commitment to lend. Program rules change; all loans are subject to credit approval, underwriting and program eligibility, and not all borrowers will qualify.