The One VA Sentence Andrew's First Lender Never Mentioned
Andrew found out there's one sentence in the VA guidelines that changes how his residual income gets judged. The lender he called first never mentioned it.
Andrew is a fictional active duty soldier near Fort Stewart, GA, and I use him to illustrate a situation that comes up often for service members buying with a VA loan. He is not a real client, but his question is one every military buyer can use.
Where Andrew found the sentence
Andrew was reading through the VA guideline while getting ready to buy a home. He expected the usual material on credit, income and entitlement. What caught his eye was a short passage in Chapter 4, Topic 9, Subsection e, about residual income.
Residual income is the amount left over after a borrower's major obligations are accounted for. The VA uses it as one way to judge whether a loan is workable for a household. The guideline publishes residual income tables, and the passage Andrew found speaks directly to those tables.
What the guideline says
Here is the text, word for word:
"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."
There are two triggers in that first sentence. One is who the borrower is: an active duty or retired serviceperson. The other is what the borrower will use: military-based facilities located near the property. The second sentence gives examples of who might fit, including Guard and Reserve military retirees, 100 percent disabled Veterans and their family members, and Medal of Honor recipients.
What most buyers get wrong
Most buyers assume the lender already knows every rule that applies to them and will handle it quietly. Sometimes that is true. But Andrew's first lender never brought the sentence up, and without asking he had no way to see whether the reduction was part of his file.
The other common mistake is assuming the number on a worksheet is the only possible reading. The guideline itself says to reduce the figure from the tables under certain conditions. If you are in one of those groups, it is fair to ask whether that step happened.
The question Andrew asked
Andrew did not argue and he did not accuse anyone of anything. He asked a specific question and cited the exact place in the guideline:
"Under the VA guideline, Chapter 4, Topic 9, Subsection e, is the five percent residual income reduction being applied to my file, and can you show me the residual income calculation?"
Then he asked for the calculation in writing. That matters. A written calculation lets you see the numbers, keep a record, and compare them against the guideline instead of relying on a phone conversation.
What you can do today
If you are an active duty or retired service member, a Guard and Reserve retiree, an eligible Veteran or a family member buying with a VA loan near Fort Stewart or anywhere else, do three things:
1. Find Chapter 4, Topic 9, Subsection e in the VA guideline and read the passage yourself.
2. Ask your lender the exact question above.
3. Request the residual income calculation in writing and keep it with your loan papers.
A realistic note: this reduction is one piece of a larger file. Credit, income, entitlement and the property all still matter, and I cannot tell you how any particular file will turn out. What the question does is make sure you are seeing the full picture.
How I can help
I am Jason Sharon, a licensed mortgage broker, and I am licensed in Georgia as well as several other states. My approach is to find the path, which starts with reading the guideline and showing the work. If you want a second set of eyes on your VA loan file, call 843-LOW-RATE.
Home Loans Inc - Jason Sharon, Mortgage Broker. Company NMLS #1728740, Jason Sharon NMLS #1281448. Equal Housing Opportunity.
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