Get Va Residual Income Calculator

If you plan to claim income from the subject property, the VA allows you to use 75% of the gross rent on the lease to offset your mortgage expenses. However, you cannot add any excess rental income to your other income to qualify for the loan.

Residual income is simply what's left over after all your expenses are paid. To calculate that number, you simply subtract all the bills mentioned above that make up your DTI ratio. The VA's minimum residual income is considered a guide and should not trigger an approval or rejection of a VA loan on its own.

To find your approximate residual income, add up your regular monthly living expenses and subtract the total — along with your debt payments — from your gross monthly income. The money leftover after paying living expenses and debt is your residual income, which is also known as your discretionary income.

In fact, the formula for residual income is simple: Just subtract your monthly expenses, like your mortgage, car payments and student loans, from your monthly income.

To calculate residual income, the bank subtracts the mortgage payment, property insurance, taxes, and other monthly payments—credit cards, installment accounts, or student loans from the applicant's monthly income. The amount left—which doesn't include food and utilities—is considered residual income.

Residual income is calculated as net income minus a deduction for the cost of equity capital. The deduction, called the equity charge, is equal to equity capital multiplied by the required rate of return on equity (the cost of equity capital in percent). Residual Income Valuation - CFA Institute cfainstitute.org https://.cfainstitute.org › refresher-readings › residu... cfainstitute.org https://.cfainstitute.org › refresher-readings › residu...