# VA Residual Income Calculator

Residual
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.

## How important is the residual income analysis?

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

The debt-to-income ratio for VA is a ratio of total monthly debt payments (housing cost, installment loans, etc.) to gross monthly income.

It is just a guideline, and as an underwriting consideration, it is secondary to 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.