VA residual income calculator

Veteran with familyResidual income is a calculation that estimates the net monthly income after subtracting out the federal, state, local taxes, (proposed) mortgage payment, and all other monthly obligations such as student loans, car payments, credit cards, etc. from the household paycheck(s). Also included in the calculation is a maintenance & utilities expense. The net income must exceed VA residual area income charts.
The residual income calculation attempts to discern whether the veteran borrower(s) has sufficient income for gas, groceries and other typical household necessities.

Residual income Worksheet | Monthly debt calculator | Monthly Income Calculator | 
VA residual income chart |      
  Debt To Income Ratio  
  Residual income exceeds the guideline 20 percent    
  1. Gross Monthly Income  
  2. Monthly Housing Expense (PITI)    
  a. Principal and Interest Payment    
  b. Property Taxes    
  c. Homeowners Insurance    
  d, Homeowners Association Dues    
  Total =  
  3. Monthly Debts and Obligations  
  a. Car(s)    
  b. Revolving Charge Accounts    
  c. Installment Loans    
  d. Child Care Expenses    
  e. Other    
  Total =  
  4. Monthly Maintenance & Utilities    
  a. Total Square Footage    
  b. Square Footage X 14 cents per sq. ft.    
  Total =  
  5. Monthly Taxes    
  a. Federal Income Tax (from pay stubs)    
  b. State Income Tax (from pay stubs)    
  c. Social Security (salaried or SE'd)    
  d. Other    
  Total =  
  6. Residual Income    
  a. Amount Required (Per Residual Chart)    
  b. Actual (1) minus (2), (3), (4) & (5)    
  7. Debt-to-Income Ratio (VA guideline 41%)    
  (2) + (3) divided by (1)  
  Residual income exceeds the guideline 20 percent  

How important is the residual income analysis?

The residual calculation is actually more important to the VA than the customary debt to income calculation.

VA’s debt-to-income ratio is a ratio of total monthly debt payments (housing expense, installment debts, and so on) to gross monthly income. It is a guide and, as an underwriting factor, it is secondary to the residual income".
Source: VA Pamphlet 26-7, Revised Chapter 4: Credit Underwriting

If the debt-to-income ratio is greater than 41%, the borrower's residual income must exceed the area residual income by at least 20%.

Please send me an E-mail if you see an error or want to make a comment. Last updated 8/2018.