VA loans · 38 CFR 36.4340VA residual income and the 41% debt-to-income rule
VA underwriting uses two standards together: the debt-to-income ratio and residual income (38 CFR 36.4340(c)). The DTI ratio – the new PITI plus association dues and long-term debts, divided by gross income – has a standard of 41% or less. Residual income is what remains each month after the shelter expense and other obligations, and it must meet a regional minimum for the household size. For loans of $80,000 and above, the minimums are $441 (Midwest and South), $450 (Northeast) or $491 (West) for one person; $738 / $755 / $823 for two; $889 / $909 / $990 for three; $1,003 / $1,025 / $1,117 for four; and $1,039 / $1,062 / $1,158 for five, plus $80 for each extra member up to seven. Everyone in the household counts – even a spouse not on the loan, or a spouse's children – unless their own verified income is left out of the analysis. With a DTI above 41%, the loan needs a supervisor's written justification with compensating factors – unless residual income beats the guideline by at least 20%. For an active-duty member or military retiree who will keep using a nearby base, the residual figures are reduced by at least 5%. Pay stubs and employment verifications can be no more than 120 days old (180 for new construction).
Minimum residual income, loans of $80,000 and above (36.4340(e)(2))
Household of 1
Northeast $450 · Midwest $441 · South $441 · West $491
Household of 2
Northeast $755 · Midwest $738 · South $738 · West $823
Household of 3
Northeast $909 · Midwest $889 · South $889 · West $990
Household of 4
Northeast $1,025 · Midwest $1,003 · South $1,003 · West $1,117
Household of 5
Northeast $1,062 · Midwest $1,039 · South $1,039 · West $1,158
6 or 7
Add $80 for each member over five.
Regions (36.4340(e)(3))
Northeast
CT, ME, MA, NH, NJ, NY, PA, RI, VT.
Midwest
IL, IN, IA, KS, MI, MN, MO, NE, ND, OH, SD, WI.
South
AL, AR, DE, DC, FL, GA, KY, LA, MD, MS, NC, OK, PR, SC, TN, TX, VA, WV.
West
AK, AZ, CA, CO, HI, ID, MT, NV, NM, OR, UT, WA, WY.
How the two tests work together
- DTI 41% or less and residual income met: the standard case.
- DTI above 41%: written justification signed by the underwriter's supervisor, with compensating factors – not needed if residual income is at least 20% above the guideline.
- Residual income short with DTI at or under 41%: approval possible only with the same written justification.
- Loans under $80,000 use a lower table ($382–$1,004).
- Meeting both tests does not approve the loan by itself – credit is still evaluated.
What the TC can do
- Remind VA buyers that HOA dues are in the ratio – a high-dues condo changes the numbers.
- Keep pay stubs fresh: more than 120 days old at closing means new ones.
- If the closing date moves, ask the lender whether any income documents need updating.
Questions veterans ask
What is the maximum DTI for a VA loan?
The standard is 41% or less; above that, the loan can still be approved with a supervisor's written justification – or without it if residual income exceeds the guideline by at least 20% (38 CFR 36.4340(c), (d)).
How much residual income do I need for a VA loan?
It depends on region and household size. For loans of $80,000 and above, from $441 for one person in the Midwest or South to $1,158 for five in the West, plus $80 per additional member up to seven.
Does my spouse count for residual income if not on the loan?
Yes, all household members count – unless the spouse has verified stable income that is not otherwise included in the analysis.
Related guides
Mark the deal as a VA loan in ClosingCode and the checklist adds the VA fee step – with the rules guide one tap away.
Start free trialSource: 38 CFR 36.4340 (c)–(f), Underwriting standards (eCFR, read October 25, 2026).
General information about VA-guaranteed loans, not legal or financial advice. Lenders apply the regulation and VA's guidance and may add their own requirements. ClosingCode is software; it is not a lender. This guide is not a substitute for the advice or services of an attorney.