# VA residual income: the tables and how to check them

Updated September 26, 2026

Residual income is what a VA borrower has left each month after taxes, the new housing expense and significant debts. Compare it with VA's guideline for the region, family size and loan amount, then apply the approval exceptions in 38 CFR 36.4340(c). A residual shortfall with DTI at or below 41% still needs supervisor justification or VA prior approval. Above 41%, check the 20% residual cushion and tax-free-income exceptions before deciding whether that review is required.

## Key numbers

- **41%** debt-to-income standard; supervisor review also depends on residual income and the regulatory exceptions (38 CFR 36.4340(c))
- **20%** above the residual guideline removes the second-level review and justification for DTI above 41% (38 CFR 36.4340(c)(3); Topic 10b)
- **14¢ / sq ft** of gross living area for maintenance and utilities (Topic 9b, Table 8)

## The tables

These are VA's minimum monthly residual incomes, from Chapter 4, Topic 9, Tables 9 and 10. They are identical to 38 CFR 36.4340(e)(1) and (e)(2).

### Loan amounts of $79,999 and below

| 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 |

For families of more than five, add $75 for each additional member up to a family of seven.

### Loan amounts of $80,000 and above

| 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 families of more than five, add $80 for each additional member up to a family of seven.

### Regions (Topic 9, Table 11)

- Northeast: CT, ME, MA, NH, VT, NJ, NY, PA, RI.
- 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.

## Retrace the calculation

The calculation follows VA Form 26-6393, Loan Analysis. Topic 9 defines residual income as "the amount of net income remaining (after deduction of debts and obligations and monthly shelter expenses) to cover family living expenses." Rebuild it in this order:

1. Deduct taxes from gross income. Federal income tax and Social Security come from IRS Circular E, and state and local taxes from the equivalent state materials. The figure should reflect the borrower's residence and the IRS guide, "not solely the amount claimed on the paystub" (Topic 3a).
2. Deduct the shelter expense: principal and interest; taxes, at the increased amount if they are expected to rise; insurance, including flood insurance in special flood hazard areas; any anticipated special assessments; HOA dues; and maintenance and utilities (Topic 9b, Table 8).
3. Deduct significant debts, meaning those with 10 or more months remaining or shorter-term debts with payments large enough to cause a severe impact (Topic 5c). Add job-related expenses such as child care and significant commuting costs (Topic 9c).
4. Compare the result with the table for the property's region, the loan amount and the family size (Topic 9e).

Only the borrower's actual income goes in. Topic 9f lets tax-free income be grossed up to 125% for the debt-to-income ratio, but not for residual income; the regulation says the same at 38 CFR 36.4340(f)(4).

## Maintenance and utilities at 14¢ a square foot

Table 8, item 19 reads: "Calculate maintenance and utility costs using 14¢ per square foot for the gross living area as per the appraisal." VA's own example is a 1,500-square-foot home with a 1,500-square-foot unfinished basement, priced at $210 (1,500 × $0.14). The basement is out. Take gross living area from the appraisal, not total building area.

This line never reaches the ratio. The debt-to-income formula in Topic 9f adds items 15, 16, 17, 18, 20 and 40 and skips item 19, so maintenance and utilities affect residual income only.

## Family size

Count "all members of the household (without regard to the nature of the relationship)." That includes a spouse who isn't on the note, anyone who depends on the borrower for support, and any dependent claimed on the federal tax return. The lender may leave out someone fully supported by verified income that isn't in the loan analysis, such as a child for whom enough child support or foster care payments are regularly received (Topic 9e).

Table amounts stop at seven. VA's own example uses $1,199 for a family of eight in Georgia on a $150,000 loan: $1,039 plus $80 for each of the sixth and seventh members.

The military adjustment needs particular care because the official sources differ. Topic 9e describes a 5% reduction for active-duty or retired borrowers, or borrowers expected to benefit from nearby military facilities. In contrast, 38 CFR 36.4340(e)(4) describes a reduction of at least 5% for an active-duty servicemember or military retiree when the borrower or spouse is expected to continue receiving nearby-base benefits. Do not treat military status alone as satisfying both sources. If approval depends on the adjustment and the file meets only the broader handbook wording, obtain VA clarification and document the applicable basis before relying on the reduced figure.

## The 41% ratio and the 20% cushion

Round the debt-to-income ratio to the nearest whole percent. The standard is 41% or less (38 CFR 36.4340(d); Topic 9f, Table 12). Use the branches in 38 CFR 36.4340(c)(1)–(4):

| DTI and residual income | Approval treatment |
|---|---|
| DTI at or below 41%; residual meets the guideline | Assess the entire credit case; meeting both standards does not guarantee approval |
| DTI at or below 41%; residual below the guideline | Supervisor-signed substantive justification, or submission for VA prior approval under (c)(4) |
| DTI above 41%; residual at least 120% of the guideline | No second-level review or justification statement required under (c)(3) |
| DTI above 41%; no applicable exception | Supervisor-signed substantive justification, or submission for VA prior approval under (c)(2) and (c)(4) |
| DTI above 41% solely because of tax-free income | Apply the exception in (c)(2) and note the basis in the file; this does not excuse an inadequate residual-income analysis |

For DTI above 41%, the 20% cushion removes the second-level review and statement (Topic 10b; 38 CFR 36.4340(c)(3)). When it is needed, read it: the regulation says it "must not be perfunctory" (38 CFR 36.4340(c)(4)), and meeting the residual income guideline doesn't count as a compensating factor (Topic 10d).

A shortfall does not automatically disqualify the borrower, but omitting the required approval justification is a separate QC issue. VA calls the table figures "a guide" that "should not automatically trigger approval or rejection," and asks underwriters to consider the ages of dependents and how the borrower has handled similar housing costs (Topic 10a). But "an inadequate residual income alone can be a basis for disapproving a loan," so check that the file addresses it.

## Worked example

Illustrative numbers. A family of four is buying in Georgia (South region) with a $320,000 loan, so the table minimum is $1,003.

| Line | Monthly |
|---|---|
| Gross income | $7,000 |
| − Federal income tax | (620) |
| − State income tax | (300) |
| − Social Security and Medicare | (536) |
| Net take-home pay | $5,544 |
| − Principal and interest | (2,050) |
| − Property taxes | (330) |
| − Hazard insurance | (140) |
| − Maintenance and utilities (1,700 sq ft GLA × $0.14) | (238) |
| − Auto and student loan payments | (600) |
| Residual income | $2,186 |

The ratio is ($2,050 + $330 + $140 + $600) ÷ $7,000 = 44.6%, which rounds to 45%, above 41%. But 120% of $1,003 is $1,203.60, and residual income of $2,186 clears it, so no supervisor justification is required.

Had residual income been $1,150, it would meet the guideline but fall short of 120%, and at a 45% ratio the file would need the supervisor-signed statement listing compensating factors. Had the borrower been active duty, the guideline would drop to at least $1,003 × 0.95 = $952.85.

## Common catches

- A basement counted in the 14¢ area.
- A dependent from the tax return missing from the family size.
- The $79,999 table used on a larger loan.
- Tax-free income grossed up in the residual calculation.

The lender remains responsible for the underwriting decision.

## FAQ

**What is the VA residual income for a family of four?**
For loans of $80,000 and above: $1,025 in the Northeast, $1,003 in the Midwest and South, and $1,117 in the West (Topic 9, Table 10).

**Does VA require the 20% cushion?**
No. It only removes the need for the supervisor's justification statement when the ratio is above 41% (Topic 10b; 38 CFR 36.4340(c)(3)).

**Can tax-free income be grossed up for residual income?**
No. Grossing up applies only to the debt-to-income ratio (Topic 9f).

## Sources

- VA Pamphlet 26-7, Lenders Handbook, Chapter 4, Credit Underwriting (Topics 3, 5, 9, 10; change date February 22, 2019; online article version 4, last modified August 26, 2026): https://www.knowva.ebenefits.va.gov/system/templates/selfservice/va_ssnew/help/customer/locale/en-US/portal/554400000001018/content/554400000330850/VA-Pamphlet-VAP26-7-Chapter-04-Credit-Underwriting
- VAP26-07 Lender's Handbook, all chapters (older benefits.va.gov WARMS links now redirect to KnowVA): https://www.knowva.ebenefits.va.gov/system/templates/selfservice/va_ssnew/help/customer/locale/en-US/portal/554400000001018/topic/554400000027323/VAP26-07-Lenders-Handbook
- 38 CFR 36.4340, Underwriting standards (eCFR; last amended 90 FR 1903, January 10, 2025): https://www.ecfr.gov/current/title-38/section-36.4340

This guide summarizes agency requirements as of the date above. It is not legal advice.