Most veterans I talk to assume their credit score decides everything. With a VA loan, it doesn't. The number that carries the most weight is one almost nobody has heard of…residual income.
This is the first post in a short series I'm running through Veterans Day on November 11. If you've earned this benefit, I want you to understand it well enough to use it with confidence — not just nod along at the lender's desk.
The two things the VA looks at
The VA sets two income qualifications for its loans: residual income and debt-to-income ratio. They work together, but they are not equal.
Residual income: the number that matters most
Residual income is the money you have left over each month after your fixed expenses are paid — car notes, credit cards, student loans, childcare, estimated utilities, and the new house payment.
The VA's minimum isn't one flat number. It depends on the region you live in and how many people are in your household. Here's why I love this rule: it asks the question that actually matters. Not "what does a formula say?" but "after the bills, can this household still breathe?"
Debt-to-income: 41% is a guideline, not a wall
Your debt-to-income ratio (DTI) compares your total monthly debt payments to your gross monthly income. The VA's benchmark is 41%, which is more relaxed than many conventional loans.
Here's the part people get wrong: 41% is not a hard cap. The VA treats DTI as secondary to residual income. If your residual income comfortably clears the VA's minimum, a lender can approve you above 41% — they just have to document why.
Straight talk: too many veterans talk themselves out of buying because an online calculator said "too high." Don't let a generic tool make that call. Let a VA lender run your actual number.
The funding fee
Most VA borrowers pay a one-time funding fee that keeps the program running. The amount depends on your loan amount, your down payment, and whether this is your first VA loan. Not everyone pays it, though — and that's exactly what next week's post is about.
The VA appraisal
A VA-approved appraiser will confirm two things: that the home is worth the loan amount, and that it meets the VA's minimum property requirements — safe, sound, and sanitary. Think of it as a second set of eyes looking out for you. (There's a Texas-specific protection tied to this appraisal that I'll break down on November 4.)
You have to live there
A VA loan is for your primary residence. It can't be used to buy a vacation home or a pure investment property. If you're thinking about a duplex or fourplex you'd live in, that conversation is worth having — call me.
Here's who this is for
Veterans, active-duty service members, and eligible surviving spouses who are renting right now and assuming they need 20% down and a perfect credit score to buy. You may be closer than you think.
Every situation is different, so your actual numbers should come from a licensed VA lender. I'm happy to connect you with lenders I trust.
If you have any questions, call me — 281.944.5484. LaShambra Ewing, MBA, Broker Associate, Keller Williams Realty Southwest. VA certified, serving Houston and surrounding communities.
