VA residual income represents the monthly funds left over after paying taxes, debts, projected mortgage, and utilities—essentially your “breathing room” after major bills.
In 2025, the VA specifies minimum residual income thresholds based on loan amount, family size, and geographic region.
Charts divide loan tiers (< $80,000 and ≥ $80,000) across Northeast, Midwest, South, and West, with step‑ups for households over five. These guidelines help ensure veterans can afford daily living expenses even with a zero‑down home purchase.
Understanding these requirements is key to preparing a stronger VA loan application. For detailed region tables, visit our 2025 VA Residual Income Charts.
See how much of a VA Loan your residual income will qualify you for
In this Article
What Exactly Is Residual Income on a VA Loan?
Think of residual income as disposable cash after the big-ticket items are paid—mortgage principal and interest, property taxes, homeowners insurance, HOA dues, car loans, credit cards, student loans, child support, and alimony. What’s left must cover food, utilities, health care, gas, and all those “life happens” expenses the VA knows can derail budgets.
Unlike the traditional DTI ratio—focused on percentages—the residual income test is expressed in dollars. The VA adopted it after studying Consumer Expenditure Survey data from the Bureau of Labor Statistics and tying default rates to household cash flow.
2025 Residual Income Guidelines by Region & Family Size
The VA splits the United States into four geographic regions—Northeast, Midwest, South, and West. The tables below show minimum required monthly leftover income for borrowers based on their loan size and household size. Most purchase loans today fall into the second table, which covers loans ≥ $80,000.
Loan Amounts ≤ $79,999
| Family Size | Northeast | Midwest | South | West |
|---|---|---|---|---|
| 1 | $390 | $382 | $382 | $425 |
| 2 | $654 | $641 | $641 | $713 |
| 3 | $788 | $772 | $772 | $859 |
| 4 | $888 | $868 | $868 | $967 |
| 5 | $921 | $902 | $902 | $1,004 |
| 6+ | Add $75 for each household member beyond five | |||
Loan Amounts ≥ $80,000
| 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 |
| 6+ | Add $80 per household member beyond five | |||
How to Read the Chart (At a Glance)
- Loan size matters: Rates cross the $80k barrier increase thresholds by ~$60–$140.
- Family size drives the biggest jump: A two‑person vs. four‑person household adds around $250.
- Region fine-tunes the number: West is highest, Midwest and South are typically lowest.
- Large families: Keep adding $75–$80 for each person beyond five.
Step-by-Step: Calculating Your Residual Income
- Total gross monthly income: Include base pay, BAH, BAS, drill pay, VA disability, spouse or part-time income.
- Subtract taxes: Use your LES or tax brackets for federal & state withholding.
- Subtract the new mortgage payment: PITI plus HOA dues or required reserves.
- Subtract recurring debts: Auto loans, credit cards, student loans, child support, alimony.
- The result is your residual income: Compare it against the chart based on your region, family size, and loan amount.
Real-World Example
Example: An E-6 in Colorado Springs earns $7,200 monthly (including $800 BAH, $300 BAS, $400 overtime) financing a $450,000 VA mortgage with $2,950 PITI. Taxes are $1,050, debts are $450. Residual income is:
$7,200 – $1,050 – $2,950 – $450 = $2,750. For a family of four in the West (≥$80k mortgage), requirement is $1,117. This veteran exceeds it by well over 20%, making approval very likely.
Why VA Uses Residual Income Over DTI
While DTI measures debt as a percentage of income, residual income shows whether you have real money left to handle monthly life costs. The VA found that borrowers with sufficient leftovers default less often—even if their percentage of debt is high. This makes residual income a more accurate gauge of monthly affordability.
What If You Fall Short?
Not meeting the residual income ask isn’t a dead end. Here are ways to improve:
- Pay down debts: Eliminating a car or credit card payment directly adds to your leftover cash.
- Gross up tax-free income: You can gross up VA disability or BAH by 25% for underwriting calculations.
- Smaller loan amount: Even trimming $10k can lower PITI below the threshold.
- Use compensating factors: High credit score (≥720), sizable down payment, or significant cash reserves.
- Manual underwriting: Often used by lenders familiar with VA rules if your scenario is atypical.
Top Misconceptions About VA Residual Income
- “It’s the same as DTI.”
- No—DTI is a ratio, residual income is a cash floor.
- “Fail the chart equals denial.”
- Not always—strong compensating factors can override a shortfall.
- “BAH doesn’t count.”
- It does, and because it’s tax-free, you can gross it up.
- “Only veteran income counts.”
- No—verified spouse or co-borrower income works too.
2025 FAQ – VA Residual Income
1. Do residual income thresholds change yearly?
Not often. The 2025 figures are unchanged since 2014. VA focuses updates on guidance, not dollar thresholds.
2. Which states go into each region?
States are grouped by region—Texas = South; California = West. Full list is in VA Pamphlet 26‑7.
3. Are disabled vet thresholds different?
No—they must still meet the same numbers. However, their disability income both boosts existing income and lowers taxable portion.
4. How does this interact with 41% DTI rule?
If your residual income exceeds the guideline by 20% or more, lenders will often allow DTIs in the mid‑50% range.
5. Does daycare count as debt?
Yes—daycare, after‑school care, child support must be included in debts.
6. Are FHA or USDA easier?
They have different benchmarks (primarily DTI), but require mortgage insurance and down payment. VA loans may cost less long-term.
7. Can bonus pay be used?
Yes—if received for two years and likely to continue. Deployment or hazard pay is typically excluded.
8. How large a cushion should I aim for?
A 10% cushion shows responsibility. A 20% surplus often helps offset credit score or DTI concerns.
Key External Resources
Levi Rodgers is a real estate expert and retired U.S. Army Green Beret. He writes about VA loans, homeownership, and helping Veterans buy homes. After service, he built a top real estate team and shares trusted advice for first-time and military buyers. Get to know Levi Rodgers
