The Quick Read: There is no single dollar figure for a National Guard member. VA sets the required residual income from a table built on region, family size and loan amount, and Guard status does not change that table. What Guard status changes is eligibility and how drill and orders pay get documented as income. Most cash-out loans land in the higher loan-size tier.
What Residual Income Is (and How It Differs From DTI)
Residual income is the money left each month after the new housing payment, shelter costs, debts, income taxes and job-related costs. VA wants that leftover cash to cover groceries, utilities, fuel and everything else a household spends on living. The VA Lenders Handbook, Chapter 4 records the result in the guideline box on the loan analysis form, VA Form 26-6393.
Debt-to-income is a different test. It is monthly debts divided by gross income. Residual income uses income after taxes and job costs.
| Factor | Debt-to-income | Residual income |
|---|---|---|
| Measures | Debts as a share of gross income | Dollars left after all obligations |
| Income basis | Gross | After taxes and job costs |
| Benchmark | 41% guideline | VA table by region, family, loan size |
| If missed | Can be offset by strong residual income | Reviewed with justification |
On the wholesale VA programs Lendmire places files with, residual income is the controlling test. The 41% figure is a guideline, not a cap. A ratio above it needs residual income well above the table.
How Is the Required Amount Set?
The required amount comes from three inputs: region, household size and loan tier. The regulation at 38 CFR 36.4340 splits the table at loans of $79,999 and below versus $80,000 and above. There are four regions: Northeast, Midwest, South and West. The regulation defines which states sit in each.
Nearly every cash-out refinance is above $80,000, so the higher-tier column is the one that matters. Many web pages print the lower-tier numbers or old figures. Do not use them as your cash-out target. The exact higher-tier dollar amounts are in Table 9 of the VA Lenders Handbook, Chapter 4, and a loan officer can read you the cell for your region and household.
Two rules about household size trip people up:
- All household members count, including a spouse who is not on the title or note, and people who are not legal dependents.
- A spouse with no income still raises the required amount.
The Handbook does let a lender reduce family size in special cases. Its example is foster care, where a county stipend for two foster children means a family size of two is used instead of four.
The tables rest on Bureau of Labor Statistics expenditure data, as the Federal Register notice explains. They are not a guess.
Does the Guard Get a Different Table?
No. This is the most common misconception. A Guard member uses the same region, family and loan-tier table as anyone else. Guard status matters in two places.
Eligibility. VA.gov lists National Guard members with at least 90 days of active service, including at least 30 consecutive days, under Title 32 (Sections 316, 502, 503, 504 or 505). Service requirements are VA’s rules, and the certificate of eligibility (COE) decides. The COE can come through the lender, VA.gov or by mail. Check VA.gov for other service paths, such as Selected Reserve time.
Income documentation. Drill pay, annual training and orders pay do not arrive like a steady civilian paycheck. That is where Guard files get questions.
How a Guard Member’s Income Gets Counted
Only verified, actual income counts, and there is no “grossing up” in the residual income test. The Handbook says only verified income can be considered. For civilian jobs it calls for a minimum of two years of employment verification. Standard documents include a recent 30-day paystub, a verification of employment, and traditional personal-income documentation compared for consistency.
| Income type | Typical treatment | What the file needs |
|---|---|---|
| Civilian job | Counted with 2-year history | Paystub, VOE, W-2s |
| Drill pay | Counted if steady and documented | Pay records over time |
| Annual training | Counted as part of the pattern | Pay records, orders |
| Orders pay | Depends on duration | Orders showing length |
| Temporary items | Not counted | GI Bill education pay, unemployment |
Drill pay is paid per drill period. A lender wants to see that it repeats, so the pay history carries the weight. Where a military allowance has an unknown end date, the Handbook says it may still offset short-term obligations of six to 24 months. Temporary items such as Post-9/11 GI Bill education allowances and unemployment compensation are not counted.
The usual failure here is paperwork, not the rule. Variable pay with thin records gets discounted or excluded.
Why Cash-Out Is Different
The cash-out is a new, larger loan. Residual income is run on the new payment, not the one you have today. The Handbook’s underwriting standards apply to purchases and regular cash-out refinances. An IRRRL, the VA-to-VA streamlined refinance, is typically subject to more limited documentation requirements than a cash-out, depending on lender guidelines and the loan’s payment history, so a residual income test may not apply.
A cash-out is a different file. Across the wholesale programs Lendmire places VA files with, the cash-out reaches 100% of the appraised value including the financed funding fee, refinances any loan type into VA, and carries a net tangible benefit and seasoning of the later of 210 days from the first payment and the sixth payment. You can read about the VA cash-out refinance program on Lendmire’s site.
The funding fee on a cash-out is 2.15% for first use and 3.3% after first use, per VA’s funding fee page. It is the same for Veterans, active duty and Guard and Reserve members, and it does not change with down payment. It is reviewable, and veterans receiving compensation for a service-connected disability and other exempt groups are waived. Some calculators still show an older, higher Guard rate. Treat that as stale.
The practical point: every extra dollar you pull raises the balance, so the payment rises and residual income shrinks.
The Step-by-Step File
1. Eligibility and COE. The lender needs proof of service and character of service.
2. Income verification. Civilian and military pay get documented as above.
3. Build the new payment. The larger loan, including the financed fee, sets the housing payment.
4. Compute residual income. Gross income minus the new housing payment, shelter costs, debts, income taxes and job-related costs.
5. Compare to the table. Find the cell for region, family size and the higher loan tier.
6. Run DTI separately. Total monthly debts over gross income, against the 41% guideline.
7. Appraisal. VA sets reasonable value and checks property requirements. The wholesale programs reach 100% of appraised value, subject to lender guidelines.
A Worked Example
Picture a Guard member with a civilian job and drill pay, a spouse and two children, in the South region. That is a family of four, and the new loan is well above $80,000.
The file takes the civilian pay plus the documented drill pay, then subtracts the new payment, debts, taxes and job costs. The result is compared to the higher-tier South, family-of-four cell.
Three outcomes are common:
- Clears the table and DTI is at or under 41%. The deal works forward on the usual review.
- Clears DTI but falls short on residual income. The loan may be approved with justification from the underwriter’s supervisor.
- Over 41% but residual income well above the table. The guideline allows it. An older VA document set a cushion of 20 percent over the guideline to skip the second-level review. Confirm the current rule with a loan officer before relying on that figure.
Meeting both standards does not necessarily mean approval, per the eCFR, since the final decision remains subject to the underwriter’s overall review. Failing one does not necessarily mean denial either.
How Much Cash Can You Pull?
Think of it as a test run in reverse. Start with the residual income cell you must clear. Then see how large a new loan leaves you above it.
| Cash-out size | New payment | Residual income | Result |
|---|---|---|---|
| Smaller | Lower | Higher cushion | Safer |
| Mid | Moderate | Narrower | Check the cell |
| Larger | Higher | May fall below | Likely a problem |
A good loan officer runs two or three amounts before the file goes in. Pulling less cash is often the cleanest fix.
If You Fall Short
Each lever has a tradeoff.
- Reduce the cash-out. Lowers the new payment. You get less cash.
- Pay off a specific debt. Removes a monthly obligation. Uses cash you may want elsewhere.
- Add documented income. Counts only if it is verified and steady, and the household member counts anyway.
- Compensating factors. The regulation lists examples such as excellent long-term credit, conservative use of consumer credit, minimal consumer debt, long-term employment and a down payment of at least 10 percent.
- Waiver. Reserved for extraordinary circumstances, when VA finds the veteran a satisfactory credit risk.
Only the borrower’s actual income is used, so tax-free income does not get a bump.
Where the Rule Breaks
- Non-VA existing loan. A VA cash-out can pay off a conventional or FHA loan. It still needs full underwriting.
- IRRRL. Only for an existing VA loan on the property, with generally no income underwriting.
- Occupancy. Cash-out loans are for a home you or a spouse live in. If the title raises a rental, occupancy decides the leverage and program. Cash-out proceeds cannot count as the required reserves on a rental.
- Credit. VA sets no minimum credit score. The wholesale programs Lendmire places with start at a 580 decision score, and lenders may set a higher floor.
Documentation Checklist for Guard Members
- Certificate of eligibility, or the service records to get one.
- Recent 30-day paystub and VOE for the civilian job.
- Two years of traditional personal-income documentation.
- Drill and annual training pay records showing a steady pattern.
- Orders showing duration for any mobilization pay.
- Records of debts and household members.
Common Mistakes
- Using lower-tier table numbers found online.
- Forgetting a non-earning spouse counts in family size.
- Counting temporary income such as GI Bill pay.
- Assuming the Guard has its own table.
- Judging the file on the old payment, not the new one.
Key Terms Defined
Residual income: The monthly money left after taxes, debts, shelter costs and job costs, measured against a VA table.
Debt-to-income (DTI): Monthly debts divided by gross monthly income, with a 41% guideline.
Certificate of eligibility (COE): The VA document that confirms your service qualifies you for the benefit.
Funding fee: A VA charge on the loan, reviewable and waived for exempt groups.
Net tangible benefit: The test that a refinance must leave the borrower better off.
If you are weighing a cash-out refinance against keeping the loan you have, Lendmire can help you compare the programs and the equity each one reaches. Tax treatment can depend on your situation; borrowers should speak with a qualified tax professional before relying on any deduction or credit. All figures are subject to lender guidelines and full file review, and nothing here is a commitment to lend.
Frequently Asked Questions
Is there a fixed residual income number for Guard members?
No. The amount depends on your region, household size and loan tier, and the table is the same one every VA borrower uses. Guard status affects eligibility and how drill pay is documented.
Does drill pay count toward residual income?
It can, when it is verified and shows a steady pattern in your pay records. Temporary items like GI Bill education pay and unemployment do not count. Thin records are the usual reason variable pay gets discounted.
Does my spouse count if they have no income?
Yes. All household members count toward family size, even a spouse not on the title or note, and that raises the required amount. The income side only counts income that is actually verified.
Does failing residual income mean automatic denial?
No. Failing one standard does not automatically disqualify you, and passing both does not guarantee approval. A file short on residual income can be reviewed with justification.
Is the funding fee different for the Guard on a cash-out?
No. The cash-out fee is 2.15% for first use and 3.3% after, the same as for Veterans and active duty. It is waived for veterans receiving compensation for a service-connected disability and other exempt groups.
For your own numbers, request a scenario review with Lendmire.
About Lendmire
Lendmire — NMLS# 2371349 — is a mortgage broker that arranges FHA, VA, conventional and jumbo home purchase and refinance financing in 16 states through wholesale lenders. Every option is subject to the lender’s guidelines and full underwriting. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
For the program’s current guidelines, see VA loan programs.
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References
1. VA Lenders Handbook, Chapter 4
5. VA funding fee and closing costs
6. eCFR, 38 CFR Part 36 (2021 snapshot)
This article is part of Lendmire’s VA Loans series — every loan program’s qualification details, guidelines, and scenarios live on the loan options page.
Related reading: How Much a VA Cash-Out Can Clear at Full Value on a $400K Home · VA Cash-Out DTI and Residual Income Requirements by Family Size · How Much the Fee Exemption Changes Cash and Payment on a VA Cash-Out
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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Compliance and disclosures. Lendmire (NMLS# 2371349) is a licensed mortgage broker and is not a direct lender, depository institution, financial advisor, or tax professional. Content in this article is general market analysis and educational information — not financial, legal, or tax advice for any specific situation. Lendmire does not guarantee loan approval; every transaction is subject to underwriting by the funding lender. Mortgage pricing and loan program guidelines are subject to change at any time without notice and vary by borrower characteristics, property type, and state regulations. Lendmire complies with Equal Housing Opportunity. Licensure verification: NMLS Consumer Access.