Did you know that when lenders pre-qualify a veteran for a VA loan, they must assess another income not required other loan types?
It’s called residual income or the net income remaining to cover household expenses. The net income can include all of the following:
- All debts included in the debt to income ratio
- Child care expenses
- Taxes
- Social Security
- Medicare
- Utilities
The residual income must be over a certain threshold, which takes into account the household size.
In the chart below, look at the “South” column (which includes Virginia). For a family of four, the buyer must have a residual monthly income above $1,003 to qualify for a VA loan.
Why? The VA wants to protect veterans and make sure they have sufficient funds for everyday living and emergencies.
Feel free to print out the chart and keep for reference!
Photo courtesy of Jed Record (Flickr)