By Nate Carver, Mortgage Loan Officer with Success Mortgage Partners
When it comes to securing a VA home loan, understanding VA residual income is crucial. Yet, many loan officers overlook this vital guideline, potentially jeopardizing deals and causing unnecessary stress for veterans and real estate professionals alike. As someone who has navigated the intricacies of VA loans extensively, I'm here to shed light on how VA residual income works, how it's calculated based on family size and geographic location, and why the VA emphasizes this requirement.
What is VA Residual Income?
VA residual income is the amount of net income remaining each month after all major expenses are paid, including the mortgage payment, taxes, insurance, and other debts. This leftover income is what the VA believes is necessary for a veteran and their family to cover typical living expenses like food, transportation, and medical care.
How is VA Residual Income Calculated?
The calculation of VA residual income takes into account:
Family Size: The number of people in your household affects the required residual income. Larger families need more residual income to cover living expenses.
Geographic Location: The cost of living varies across different regions. The VA divides the country into regions to adjust the residual income requirements accordingly.
Here's a simplified breakdown:
Determine Gross Income: Start with your total monthly income.
Subtract Taxes and Deductions: Deduct federal, state, Social Security taxes, and any other payroll deductions.
Subtract Monthly Debt Obligations: This includes the proposed mortgage payment, credit card payments, car loans, and other debts.
Resulting Residual Income: The amount left is your residual income.
The VA provides specific residual income guidelines based on family size and region. For example, a family of four in the Northeast might have a different residual income requirement than a similar family in the South due to cost of living differences.
Why Does the VA Emphasize Residual Income?
The VA's focus on residual income is designed to ensure veterans can comfortably afford their homes without financial strain. By considering family size and geographic location, the VA aims to prevent loan defaults and promote long-term financial stability for veterans.
The Importance of Working with an Experienced Loan Officer
Many loan officers lack a deep understanding of VA residual income and its impact on loan approval. This oversight can lead to deals falling through late in the process, causing frustration for all parties involved. As an experienced VA loan specialist serving Texas (TX), Alabama (AL), and Tennessee (TN), I prioritize these guidelines from the outset to ensure a smooth transaction.
Let's Connect
If you're a veteran considering a VA home loan or a real estate professional seeking a knowledgeable partner, I'm here to help. Let's navigate the complexities of VA loans together to secure the best outcome for you.
Contact me at:
Phone: 972-832-5761
Email: ncarver@smprate.com
Understanding VA residual income is essential for a successful home buying experience. Don't leave it to chance—reach out today to Nate Carver, who knows the ins and outs of VA home loans.
Comments