DictionaryLoans

Residual income: what it means

Residual income is the money you have left each month for your family's living expenses after paying your housing costs and your other monthly debts. On VA loans, the lender uses two main standards to judge whether your income is enough: the debt-to-income ratio and residual income.

In Spanish it is

Ingreso residual (residual income)

Also written as: VA residual income · residual income test

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Verified on October 17, 2026

2 official sources

See the whole dictionary

The full explanation

The VA publishes guideline tables with minimum amounts by region and family size, and everyone living in the household is counted. Ordinarily you must meet both standards, but failing one does not automatically disqualify you.

An example

Daniel and his wife have three children and apply for a VA loan. Their lender figures out how much they have left each month after the house payment and their debts, and compares it with the VA's table for a family of five in their region.

You will see it in…

The VA loan analysis your lender prepares
The VA regulation (38 CFR 36.4340), with the tables by region
The ability-to-repay rules, where a lender may consider your residual income

Words that go with it

You will rarely see this word alone. These are the ones that show up with it on the same papers.

Still confused by a paper?

A HUD-approved housing counselor can walk you through it. Agencies usually charge little or nothing, many work in Spanish, and they do not sell you anything.

What a housing counselor does See free help

Official sources

We sum up what these official sources say, in plain words. We add no rules they do not state; when a rule changes, the definition and its date change.

1. Legal Information Institute (Cornell Law School) · 38 CFR § 36.4340: underwriting standards, processing procedures, lender responsibility, and lender certification (external site) · in English · Verified on October 17, 2026
2. CFPB · What is a Qualified Mortgage? (external site) · in English · Verified on October 17, 2026