What residual income is
It is what your household has left each month after taxes, the house payment, upkeep and utilities, and your other debts. The VA sets a minimum by family size and region. Clear it and you are past the harder of the two tests. Miss it and a lender needs strong reasons to approve the loan, even when the debt-to-income ratio looks fine.
Two things work in your favor. Lenders can take 5% off the minimum for active-duty and retired military who use the post's facilities. And if you clear the minimum by 20% or more, a lender can approve a debt-to-income ratio above the usual 41% without extra justification.
The VA residual income chart
| Family size | Northeast | Midwest | South (Oklahoma) | 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 |
| Over 5 | Add $80 for each additional person, up to a family of seven | |||
| Family size | Northeast | Midwest | South (Oklahoma) | 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 |
| Over 5 | Add $75 for each additional person, up to a family of seven | |||
From the VA's underwriting standards, 38 CFR 36.4340. Oklahoma is in the South region. The debt-to-income figure above counts tax-free income at 125%, the most a lender can use.
Common questions
What is the VA residual income requirement in Oklahoma?
Oklahoma is in the VA's South region. On loans of $80,000 and up the monthly minimum is $441 for one person, $738 for two, $889 for three, $1,003 for a family of four and $1,039 for five, plus $80 for each additional person up to seven.
How do you calculate VA residual income?
Start with gross monthly income. Subtract taxes, the full house payment, an allowance for upkeep and utilities at 14 cents per square foot, child care, and your other monthly debts. What is left is residual income.
Does BAH count toward VA residual income?
Yes. BAH, BAS and VA disability compensation all count as income, and because they are not taxed, every dollar of them goes straight into the calculation.