How to Complete VA Form 26-6393, Loan Analysis

In order to properly enter information on VA Form 26-6393, the underwriter must understand and apply the guidelines provided.

Self-explanatory items are not discussed in this section.

Section C, Estimated Monthly Shelter Expenses

It is important to estimate these expenses accurately because they will be deducted from monthly income to arrive at the balance available for family support.

Section D, Debts and Obligations

List all known debts and obligations of the applicant and spouse, including any alimony and/or child support payments. Place a check mark in the column next to any “significant” debt or obligation.

Note: Debts and obligations with less than 10 months remaining should be listed, but do not have to be counted unless the payment would cause a severe impact on the family’s resources for any period of time.

Item 44, Balance Available for Family Support

Enter the appropriate residual income amount from the table in the “guidelines” box. Residual income is the amount of net income remaining (after deduction of debts, obligations and monthly shelter expenses) to cover family living expenses such as food, health care, clothing, and gasoline.

Item 45, Debt-to-Income Ratio

The ratio is determined by taking the sum of the principal and interest payment, homeowners’ and other assessments, (item 15, 16, 17, 18 and 21) and obligations to be deducted from income (item 41), divided by the total of gross salary or earnings (item 32) and other compensation or net income (item 39).

The ratio should be rounded to the nearest two digits and will be entered in item 45 of VA Form 26-6393.

Residual Income

VA’s minimum residual income (balance available for family support) is a guide, and should not automatically trigger approval or rejection of a loan. Instead, consider residual income in conjunction with all other credit factors. An obviously inadequate residual income alone can be a basis for disapproving a loan.

Note: If residual income is marginal, look to other indicators such as the applicant’s credit history, and in particular, whether and how the applicant has previously handled similar housing expense.

Debt-to-Income Ratio

VA’s debt-to-income ratio is a ratio of total monthly debts' payments (housing expense, installment debts, etc.) to gross monthly income. It is a guide and, as an underwriting factor, it is secondary to the residual income. It should not automatically trigger approval or rejection of a loan. Instead, consider the ratio in conjunction with all other credit factors. A ratio greater than 41 percent requires close scrutiny, unless the ratio is greater than 41% solely due to the existence of tax-free income, OR residual income exceeds the guideline by at least 20 percent.

If a loan is closed on an automatic basis with a ratio greater than 41%, the file must contain a statement justifying the reasons for approval, signed by the underwriter’s supervisor, unless residual income exceeds the guideline by at least 20 percent. The statement must list the compensating factors justifying approval of the loan. (See Compensating Factors)

Table of Residual Incomes by Region For loan amounts of $79,999 and below
Family Size	Northeast	Midwest	South	West
1	$390	$382	$382	$425
2	$654	$641	$641	$713
3	$788	$772	$772	$859
4	$888	$868	$868	$967
5	$921	$902	$902	$1,004
over 5	Add $75 for each additional member up to a family of 7

For loan amounts of $80,000 and above
Family Size	Northeast	Midwest	South	West
1	$450	$441	$441	$491
2	$755	$738	$738	$823
3	$909	$889	$889	$990
4	$1,025	$1,003	$1,003	$1,117
5	$1,062	$1,039	$1,039	$1,158
over 5	Add $80 for each additional member up to a family of 7

Note: For loan applications in which either the borrower or the spouse is an active-duty service person, the residual income figures above may be reduced by 5 percent, if there is a clear indication that the borrower or spouse will continue to receive the benefits resulting from the use of nearby military-based facilities. This reduction may also be applied to retired military applicants when the property is located reasonably near a military base or installation. (This reduction applies to both of the above tables.)

Key to Geographic Regions Used in the Residual Income Tables
Northeast	Connecticut	New Hampshire	Pennsylvania
	Maine	New Jersey	Rhode Island
	Massachusetts	New York	Vermont
Midwest	Illinois	Michigan	North Dakota
	Indiana	Minnesota	Ohio
	Iowa	Missouri	South Dakota
	Kansas	Nebraska	Wisconsin
South	Alabama	Kentucky	Puerto Rico
	Arkansas	Louisiana	South Carolina
	Delaware	Maryland	Tennessee
	District of Columbia	Mississippi	Texas
	Florida	North Carolina	Virginia
	Georgia	Oklahoma	West Virginia
West	Alaska	Hawaii	New Mexico
	Arizona	Idaho	Oregon
	California	Montana	Utah
	Colorado	Nevada	Washington