VA Loan Residual Income 2026: The Table Every MLO Must Know

VA loans have two income tests. Most MLOs focus on DTI and overlook residual income until an underwriter declines the file. Residual income is the dollars left over each month after all major obligations are paid. It is not derived from DTI. A borrower can have a 35% DTI and still fail residual income if their net income is low. A borrower at 50% DTI can still pass if their gross income is high enough.

How Residual Income Is Calculated

Start with gross monthly income, then subtract federal and state income taxes, Social Security and Medicare taxes, the proposed monthly housing payment (PITIA), all monthly debt obligations, and a maintenance and utilities estimate ($0.14 per square foot of living area). The amount left is residual income. Compare that figure to the VA threshold for the borrower's family size and geographic region.

The 2026 Residual Income Tables (Loans $80,000 and Over)

• ✦Family of 1: $390 Northeast | $382 Midwest | $382 South | $425 West
• ✦Family of 2: $654 Northeast | $641 Midwest | $641 South | $713 West
• ✦Family of 3: $788 Northeast | $772 Midwest | $772 South | $859 West
• ✦Family of 4: $888 Northeast | $868 Midwest | $868 South | $967 West
• ✦Family of 5: $921 Northeast | $902 Midwest | $902 South | $1,004 West
• ✦Over 5 family members: add $75 per additional person

Geographic Regions

Northeast states include CT, MA, ME, NH, NJ, NY, PA, RI, and VT. South includes AL, AR, DC, DE, FL, GA, KY, LA, MD, MS, NC, OK, SC, TN, TX, VA, and WV. Midwest includes IL, IN, IA, KS, MI, MN, MO, NE, ND, OH, SD, and WI. West includes AK, AZ, CA, CO, HI, ID, MT, NV, NM, OR, UT, WA, and WY.

The DTI and Residual Income Relationship

VA guidelines set a 41% DTI benchmark. Files above 41% can still be approved, but the file must demonstrate strong compensating factors. The most powerful compensating factor is residual income that exceeds the threshold by 20% or more. If residual income clears 120% of the table requirement, an underwriter has more latitude on DTI. If residual income barely meets the threshold, a file at 44% DTI is a much harder approval.

Common Mistakes

• ✦Using gross income minus PITIA minus debts -- failing to subtract taxes and utilities
• ✦Forgetting the $0.14/sq ft maintenance estimate on the subject property
• ✦Using the under-$80,000 table thresholds (5% lower) on loan amounts above $80,000
• ✦Counting childcare as an optional expense when it is recurring and documented
• ✦Not adding dependents who are supported by the veteran but not in the household