FAQ: How is VA Residual Income Calculated?

What is VA Residual Income?

VA Residual Income is the amount of net income remaining after a borrower’s monthly debts and obligations are paid. It ensures that veterans and service members have sufficient income for basic living expenses after housing costs and debt payments. The calculation aligns with VA underwriting guidelines.

Q: How does Charlie calculate VA Residual Income?

A: Charlie automates the calculation of VA Residual Income using borrower-specific data. Here’s how it works:

1. Gross Monthly Income:
   This includes all verified borrower income sources (employment, non-employment, rental, etc.).

2. Subtract Monthly Obligations:

   • Housing expenses (PITI: Principal, Interest, Taxes, and Insurance).

   • Other debts (from the credit report or manually entered liabilities).

3. Deduct Utility Allowance:
   Based on the family size and region (as per VA guidelines), Charlie automatically applies a standard utility allowance.

4. Apply Regional and Family Size Requirements:
   Charlie compares the calculated residual income against VA’s minimum required residual income tables, which factor in:

   • Family size

   • Loan region

Does Charlie automatically update VA Residual Income if inputs change?

Yes. Any updates to:

• Income details.

• Liabilities.

• Loan terms (PITI).

Will automatically trigger a recalculation of VA Residual Income, ensuring it stays accurate in real-time.