Benjamin Almost Lost His VA Loan Approval Over a Residual Income Number He Never Knew Existed

Benjamin almost lost his VA loan approval over a residual income number he never knew existed, until a five percent rule saved the deal.

Benjamin is a fictional but illustrative military-connected homebuyer looking at a property near Shaw Air Force Base in South Carolina. Like many veterans and active-duty buyers, his file went through standard VA residual income tables, which measure whether a borrower has enough leftover income each month to cover living expenses after the mortgage payment. On paper, his numbers looked short.

A Situation That Comes Up Often Near Military Bases

A situation that comes up often for military-connected buyers near installations like Shaw is exactly this: a lender runs the standard residual income tables, sees a number that looks too low, and stops there. What frequently gets missed is that VA guidelines include an overlay specifically built for borrowers in Benjamin's position, and it never gets applied unless someone knows to look for it.

The Actual VA Rule, Word for Word

Here is the guidance, exactly as written: "Reduce the residual income figure (from the above tables) by five percent if: the borrower(s) is an active duty or retired serviceperson, or there is a clear indication that a borrower will receive the benefits resulting from use of military-based facilities located near the property. Examples include Guard and Reserve military retirees, 100 percent disabled Veterans and their family members, or Medal of Honor recipients."

That is not a suggestion. It is a documented reduction that lowers the bar a borrower has to clear, specifically because of military status or proximity to base facilities.

Why Proximity to the Base Matters

In a scenario like Benjamin's, the property's proximity to Shaw Air Force Base is part of what qualifies him. It is not just about being active duty or retired. The guideline also covers Guard and Reserve retirees, 100 percent disabled veterans and their families, and Medal of Honor recipients, provided there is a clear indication they will benefit from nearby military-based facilities. That is a broader group of buyers than many people realize.

What Changes Once the Reduction Is Applied

Once the five percent reduction is applied correctly to a file like Benjamin's, the required residual income threshold drops. For a borrower sitting just below the standard number, that adjustment can be the difference between a decline and an approval. It does not change income or debts. It changes the bar being measured against.

The Exact Question to Ask Your Lender

If you are active duty, retired, Guard, Reserve, or a disabled veteran buying near a military installation, and you have been told your residual income falls short, ask this exact question: was the five percent residual income reduction under VA guideline Chapter 4, Topic 9, Subsection e applied to my file, based on my military status and proximity to base facilities near this property?

If your loan officer cannot answer that clearly, it is worth getting a second opinion before you accept a decline as final.

I am Jason Sharon, licensed mortgage broker at Home Loans Inc. I find the path through guidelines like this one every day. If you are a military-connected buyer near a base and your numbers looked short, call me at 843-LOW-RATE and let's take a real look at your file.

Home Loans Inc - Jason Sharon, Mortgage Broker. Company NMLS #1728740, Jason Sharon NMLS #1281448. Equal Housing Opportunity.