Every word of the film, for reading instead of watching.
Most loan programs ask one question about your income. How much of it is spoken for? V A asks a different question. What is left?
The number is called residual income, and it is a dollar figure, not a ratio. Take your monthly income after federal taxes. Subtract your debts. Subtract everything the house will cost.
Whatever remains is your residual income, and V A publishes a table for what that number has to be. The table scales three ways. Where you live. How many people you support.
And how big the loan is. Arizona, a family of three, a four hundred thousand dollar loan: nine hundred ninety dollars. That is V A's own example, straight out of the handbook. Two parts of the math catch people.
It runs on your income after tax, not the gross number a ratio uses. And upkeep and utilities are counted at fourteen cents per square foot, whether that is what you pay or not. A fifteen hundred square foot house adds two hundred ten dollars before you have opened a single bill. So where is the famous ratio?
Still here. But second. V A's line is forty one percent. Go above it, and the file gets a closer look.
Clear the residual table by twenty percent, and it usually does not even need the extra paperwork. And here is the asymmetry. A high ratio, by itself, does not turn down a file. A residual shortfall can.
And credit? V A does not set a minimum credit score. None. Your record gets read.
How you have handled what you owe, not a number with a cutoff. Two smaller facts worth keeping. Active duty, or retired military near base facilities? The residual bar drops five percent.
And tax free income, like a housing allowance or disability compensation, counts at one hundred twenty five percent, for the ratio only. Residual runs on what you actually receive. So. A ratio tells a lender what share of your income is spoken for.
Residual income tells them what you have left. V A underwrites what you have left. Now you know the number that actually carries your file.