Change Date

September 15, 2004, Change 4

This section has been changed to create subsection lettering.

a. Residual Income

VA’s minimum residual incomes (balance available for family support) are a guide.  They should not automatically trigger approval or rejection of a loan.  Instead, consider residual income in conjunction with all other credit factors. 

An obviously inadequate residual income alone can be a basis for disapproving a loan. 

If residual income is marginal, look to other indicators such as the applicant’s credit history, and in particular, whether and how the applicant has previously handled similar housing expense.

Consider whether the purchase price of the property may affect family expense levels.  For example, a family purchasing in a higher priced neighborhood may feel a need to incur higher-than-average expenses to support a lifestyle comparable to that in their environment, whereas a substantially lower priced home purchase may not compel such expenditures.

Also consider the ages of the applicant’s dependents in determining the adequacy of residual income.