2026 Requirements by Region and Family Size
VA Residual Income Chart: 2026 Requirements by Region and Family Size
VA residual income is the cash left each month after taxes, the full housing payment, and debts are subtracted from your actual income. The VA sets regional minimums by family size in 38 CFR 36.4340, and your file must meet the guideline for your region. Look up your number below, then calculate whether you clear.
Next step:
Have a VA Loan Officer Review Your Residual Income
VA Residual Income Calculator
Income
Taxes (actual withholding)
Housing
Monthly obligations
DTI gross-up (lender's figure)
The lender determines this percentage based on tax tables. It affects DTI only. Residual income always uses actual income. [36.4340(f)(4)]
2026 Residual Income Chart
- Four regions: The guideline changes by Northeast, Midwest, South, and West. [36.4340(e)(3)]
- Family size: The requirement rises with each household member. [36.4340(e)]
- Two tiers: One table for loans $80,000 and above, another for loans below $80,000. [36.4340(e)(1)-(2)]
- All household members count: Even a non-borrowing spouse and dependents increase the threshold. [36.4340(e)]
The 120% Threshold
- DTI over 41%: Residual income at 120% of the guideline waives supervisor review. [36.4340(c)(3)]
- Not a guarantee: It removes one procedural hurdle, not all underwriting scrutiny. [36.4340(c)(4)]
- Not ranked: VA does not rank compensating factors by strength. [36.4340(c)(6)]
- Supervisor justification waived: At 120%+ the second-level review and written statement are not required. [36.4340(c)(3)]
Tax-Free Income and Residual
- Actual income only: Residual income uses your real income, not a grossed-up amount. [36.4340(f)(4)]
- DTI is different: The lender may gross up tax-free income for DTI calculation only. [36.4340(f)(4)]
- Tax-free DTI exception: When DTI exceeds 41% solely because of tax-free income, that is noted in the loan file. [36.4340(c)(2)]
- Gross-up uses tax tables: The regulation says "current income tax tables," not a fixed percentage. [36.4340(f)(4)]
Military Adjustment
- 5% reduction: Active-duty and retirees near a base qualify for lower residual thresholds. [36.4340(e)(4)]
- Base access required: The borrower or spouse must have access to Military facilities. [36.4340(e)(4)]
- Both tiers: The adjustment applies to both the $80K+ and under-$80K tables. [36.4340(e)(4)]
- Minimum 5%: The regulation sets the floor at 5%; the reduction applies to both tables. [36.4340(e)(4)]
Top questions before you dig in
Can you use VA disability income toward residual income?
Can you get approved with a DTI over 41%?
Can you reduce the household count for residual income?
The Bottom Line Up Front
Residual income measures the cash left after your mortgage payment, taxes, debts, and a maintenance estimate are subtracted from your actual monthly income.
The VA sets minimum thresholds by region and family size in 38 CFR 36.4340. When your DTI exceeds 41%, residual income at 120% of the guideline waives the supervisor review that would otherwise be required. The gross-up for tax-free income applies to DTI only; residual income always uses actual dollars. Both tests apply to every purchase and cash-out refinance; passing one does not waive the other. To see how residual income fits into your total buying power, see How Much VA Loan Can You Afford. [36.4340(c)(3), (f)(4)]
Residual Income by Region: Loans $80,000 and Above
| Region | 1 | 2 | 3 | 4 | 5 | 6 | 7 |
|---|---|---|---|---|---|---|---|
| Northeast | $450 | $755 | $909 | $1,025 | $1,062 | $1,142 | $1,222 |
| Midwest | $441 | $738 | $889 | $1,003 | $1,039 | $1,119 | $1,199 |
| South | $441 | $738 | $889 | $1,003 | $1,039 | $1,119 | $1,199 |
| West | $491 | $823 | $990 | $1,117 | $1,158 | $1,238 | $1,318 |
Families of 6 and 7 add $80 per person above the 5-person figure. The regulation does not provide guidance beyond a family of 7. [36.4340(e)(2)]
Residual Income by Region: Loans Below $80,000
| Region | 1 | 2 | 3 | 4 | 5 | 6 | 7 |
|---|---|---|---|---|---|---|---|
| Northeast | $390 | $654 | $788 | $888 | $921 | $996 | $1,071 |
| Midwest | $382 | $641 | $772 | $868 | $902 | $977 | $1,052 |
| South | $382 | $641 | $772 | $868 | $902 | $977 | $1,052 |
| West | $425 | $713 | $859 | $967 | $1,004 | $1,079 | $1,154 |
Families of 6 and 7 add $75 per person above the 5-person figure. [36.4340(e)(1)]
Which States Fall in Each Region
| Region | States and Territories |
|---|---|
| Northeast | CT, ME, MA, NH, NJ, NY, PA, RI, VT |
| Midwest | IL, IN, IA, KS, MI, MN, MO, NE, ND, OH, SD, WI |
| South | AL, AR, DE, DC, FL, GA, KY, LA, MD, MS, NC, OK, PR, SC, TN, TX, VA, WV |
| West | AK, AZ, CA, CO, HI, ID, MT, NV, NM, OR, UT, WA, WY |
The Midwest and South share identical residual income figures in both tables. [36.4340(e)(3)]
DTI and Residual Income: How They Interact
DTI compares total monthly obligations to gross income as a percentage. Residual income measures the actual dollars remaining after every deduction. The VA guideline DTI threshold is 41%. Both tests apply; passing one does not waive the other. [36.4340(c)-(d)]
| Residual at or above guideline | Residual below guideline | |
|---|---|---|
| DTI 41% or below | Standard approval path | Supervisor review required with compensating factors |
| DTI above 41% | At 120%+ of guideline: supervisor review waived. Below 120%: supervisor review required | File needs restructuring or additional income |
None of these cells represents an automatic approval or an automatic denial. The lender evaluates the complete file including credit history, employment stability, and compensating factors. [36.4340(c)(4)]
Tax-Free Income Exception to the 41% Threshold
When DTI exceeds 41% solely because the borrower receives tax-free income, the regulation directs that this be noted in the loan file. Tax-free income lowers the effective tax burden, which increases take-home pay without changing the DTI denominator. The regulation treats this differently from DTI that is high because of heavy debt. [36.4340(c)(2)]
For a full discussion of how lenders handle grossing up VA disability income, BAH, and other non-taxable pay, see Grossing Up VA Benefits.
Grossing Up Tax-Free Income: Residual vs. DTI
The regulation draws a clear line. Tax-free income, including VA disability compensation, certain Military allowances, and workers' compensation, can be adjusted using current tax tables to produce a higher figure for DTI purposes. That adjusted figure is never used for residual income. [36.4340(f)(4)]
Residual income always uses your actual dollars received. If you receive $2,000 per month in VA disability, that $2,000 enters the residual calculation at $2,000, not at a grossed-up amount. The lender determines the gross-up percentage from tax tables; it is not a fixed 25% in the regulation. See Grossing Up VA Benefits for how this works in practice.
The 120% Threshold
When DTI exceeds 41% and residual income reaches at least 120% of the regional guideline, the regulation waives the requirement for supervisor-level review and a written statement of justification. [36.4340(c)(3)]
This is a procedural relief, not a compensating factor and not a guarantee of approval. The file still must meet all other underwriting requirements, including satisfactory credit history and stable income. A file at 120% of residual with derogatory credit may still be declined.
Military Adjustment
For active-duty servicemembers or Military retirees, the residual income figures in both tables are reduced by a minimum of 5% when there is a clear indication that the borrower or spouse will continue to receive the benefits resulting from the use of facilities on a nearby Military base. [36.4340(e)(4)]
A family of 4 in the South with a loan above $80,000 would need $1,003 under the standard guideline. With the Military adjustment, the guideline drops to $953.
Household Size: Who Counts and When the Count Can Change
Every person who depends on the borrower's income counts toward household size, including a non-borrowing spouse, dependent children, and anyone the borrower is legally obligated to support. [36.4340(e)] See also VA loan child care letter requirements.
The count can be reduced in two situations. First, if there is sufficient verified income not otherwise included in the loan analysis, such as child support being regularly received. Second, if the non-borrowing spouse has verified stable and reliable employment, that spouse may be excluded from the count. [36.4340(e)]
Maintenance and Utility Estimate
The VA requires an estimate of maintenance and utility costs as part of the residual income calculation. The regulation directs that these estimates be "realistically estimated" based on property location and type of house, and that local utility companies be consulted for current rates. Your lender provides this figure; it is not a number you choose yourself. A larger home with higher carrying costs produces a larger deduction, which directly reduces your residual income. [36.4340(i)]
Debts With Fewer Than 10 Months Remaining
Debts generally classified as "long-term" for VA underwriting are those with 10 or more months remaining. Debts under 10 months are not automatically excluded. The regulation requires that any debt with a severe impact on the family's resources be included regardless of term. The regulation's own example: a $300 per month car payment with only 5 months remaining is included because the borrower will carry that burden during the critical first months of the mortgage. [36.4340(g)(9)]
Paying off a short-term debt removes it from the calculation, but the decision about whether a short-term debt counts depends on its monthly impact, not solely on its remaining term.
Payment Shock
The VA addresses the difference between current housing costs and proposed housing costs in two ways. As a compensating factor, "little or no increase in shelter expense" counts in the borrower's favor. As a risk consideration, if the proposed shelter expense is materially higher than the borrower's current housing cost, the file receives closer scrutiny, with attention to the borrower's ability to accumulate savings and the amount of debts incurred while paying less for housing. [36.4340(c)(5)(vii), (e)]
Compensating Factors
When a file does not meet both the DTI and residual income standards, the lender evaluates compensating factors. The regulation lists 13 examples, and states explicitly that the list is not exhaustive and the items are not in any priority order. For the full list and discussion of how they apply, see VA Loan Compensating Factors. For how compensating factors work in VA Manual Underwriting, see the dedicated guide. [36.4340(c)(5)-(6)]
Refinance Loans
The residual income standards in 36.4340 do not apply to Interest Rate Reduction Refinance Loans (IRRRLs). The regulation exempts loans under 38 U.S.C. 3710(a)(8) from paragraphs (c) through (j), which include the residual income and DTI guidelines. A VA cash-out refinance is a different loan type and is subject to the full underwriting analysis, including residual income. [36.4340(a)]
Four Worked Examples
Example 1: Standard File at 38% DTI
Family of 3, South region, loan above $80,000. Taxable gross: $6,500/mo. Taxes: $975. PITI: $1,800. HOA: $100. Lender's maintenance and utility estimate: $252. Debts: car $350, credit cards $100. Residual: $6,500 - $975 - $1,800 - $100 - $252 - $350 - $100 = $2,923. Guideline for South family of 3: $889. Result: passes at 329% of guideline. DTI: ($1,800 + $100 + $350 + $100) / $6,500 = 36.2%. Both standards met; standard approval path.
Example 2: DTI Over 41%, Residual at 120%+
Family of 4, West region, loan above $80,000. Taxable gross: $5,800/mo. Tax-free VA disability: $800/mo (actual). Taxes on taxable: $870. PITI: $2,400. HOA: $75. Lender's maintenance and utility estimate: $280. Debts: car $400, student loans $200, credit cards $150. Total gross (actual): $6,600. Residual: $6,600 - $870 - $2,400 - $75 - $280 - $400 - $200 - $150 = $2,225. Guideline for West family of 4: $1,117. Result: 199% of guideline, above 120% ($1,340). DTI (actual income): ($2,400 + $75 + $400 + $200 + $150) / $6,600 = 48.9%. Supervisor review waived because residual exceeds 120% of the guideline.
Example 3: Military-Adjusted File
Family of 5, South region (active-duty, near base), loan above $80,000. Gross: $5,200/mo. Taxes: $780. PITI: $1,600. HOA: $0. Lender's maintenance and utility estimate: $238. Debts: car $300, credit cards $75. Residual: $5,200 - $780 - $1,600 - $0 - $238 - $300 - $75 = $2,207. Standard guideline for South family of 5: $1,039. Military-adjusted guideline (5% reduction): $987. Result: 224% of the adjusted guideline. DTI: ($1,600 + $300 + $75) / $5,200 = 38.0%. Both standards met with room.
Example 4: File That Misses and Is Restructured
Family of 4, Northeast region, loan above $80,000. Gross: $4,800/mo. Taxes: $720. PITI: $1,700. HOA: $200. Lender's maintenance and utility estimate: $350. Debts: car $450 (6 months left), credit cards $125. Residual: $4,800 - $720 - $1,700 - $200 - $350 - $450 - $125 = $1,255. Guideline for Northeast family of 4: $1,025. Result: 122% of guideline. DTI: ($1,700 + $200 + $450 + $125) / $4,800 = 51.6%. The file passes residual but DTI is high. Restructure: pay off the car ($450/mo with 6 months left costs $2,700 out of pocket). New residual: $1,705. New DTI: 42.2%. Now at 166% of guideline, above 120%, waiving supervisor review. The $2,700 payoff converts a file requiring extra justification into a cleaner approval.
Frequently Asked Questions
Can you count VA disability income toward residual?
Can you count an unborn child toward household size?
Can you exclude a non-borrowing spouse from the household count?
Can you use BAH toward residual income?
How are student loans treated in the residual calculation?
Can you ignore a car loan with 8 months left?
What is the Military reduction for residual income?
Does residual income apply to IRRRLs?
What happens if your residual income misses the chart?
Resources Used
- 38 CFR 36.4340, Underwriting Standards (eCFR, current as of 9/28/2026)
How We Researched This Page
The figures and rules on this page come from 38 CFR 36.4340, fetched from eCFR on September 30, 2026 (eCFR current as of September 28, 2026). The residual income tables, region assignments, Military adjustment, household size rules, DTI interaction, and compensating factors list are quoted from the regulation. The maintenance and utility estimate methodology is described in 36.4340(i); the calculator accepts the lender's estimate as a dollar input. The calculator's math uses actual income for residual (never grossed up) per 36.4340(f)(4). Each FAQ answer cites the specific paragraph supporting it.