Finance
A Mississippi lender evaluates a borrower's 'residual income' for a VA loan. Residual income is:
AIncome remaining after the borrower spends money on luxury items
BNet income remaining after all major monthly obligations (housing, debt service, taxes) are paid — VA uses minimum residual income standards based on family size and region✓ Correct
CGross income minus federal taxes only
DIncome from investments only
Explanation
VA loan underwriting uses a residual income standard — the net income remaining after all major monthly expenses (PITI, debts, taxes, child care) are paid must meet minimum thresholds based on family size and geographic region. This is in addition to (not instead of) DTI analysis and provides a floor for living expenses.
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