The VA Test Most Kentucky Borrowers Have Never Heard Of
Program and regulatory figures verified October 10, 2026. Details change; confirm your scenario with us.
This is the test that decides files nobody expected to be decided, and in Kentucky it pulls in two directions.
What the test is
Residual income is the money left each month after the mortgage payment, property taxes, insurance, maintenance, utilities, other debts and federal and state tax withholding. The VA asks whether what remains clears a threshold set by household size and by geographic region.
★ There is no conventional-loan equivalent. Conventional underwriting looks at ratios; the VA looks at a dollar amount actually left in the household. That is why a VA file can clear where a conventional file does not, and occasionally the reverse.
★ Where the table lives
The governing document is VA Pamphlet 26-7, Chapter 4, Credit Underwriting, published by the VA in its KnowVA portal. That is the current authority and the place to go.
★ The chapter is rendered by JavaScript, so a plain HTTP fetch of that page returns the application shell rather than the table text, and the VA's older WARMS document paths now redirect into the same portal. Tools that execute JavaScript read it fine. Worth knowing only because it explains why secondary sites quoting "the VA residual income table" so often disagree with each other.
★★ Why we are not reproducing the numbers
This is a policy choice, not an access problem. Two reasons.
- ★ We do not publish underwriting tables on a marketing page. Thresholds change, regional assignments change, and a stale figure in a Key Takeaway is worse than no figure. Standing policy here, not a Kentucky exception.
- ★★ The figure on its own does not help you. Residual income depends on utilities, maintenance, household size, the actual withholding on your pay and every debt on your credit report. Reading a threshold tells you nothing about whether your file clears it.
★ What we will do instead: run it on your actual numbers, before you are under contract. One conversation. (480) 296-6513.
★★ Why Kentucky helps on this test
A low payment is the single biggest lever on residual income, and Kentucky's housing is cheap against the $832,750 limit. Lexington, the dearest metro, is about 39% of it; Middlesborough is $91,654.
★★ On the same income, a Kentucky file clears this test more comfortably than the equivalent file in an expensive state. That matters most to a borrower with a large household relative to their income, which describes a lot of junior enlisted families. All 20 metros.
★★★ And the Kentucky-specific thing that works against you
Property tax is escrowed into the payment, and the payment is what residual income is measured against.
★★★ Kentucky's homestead exemption is narrow: it needs age 65 or classification as totally disabled. A 34-year-old veteran with a 50% rating escrows the full property tax bill, where an Ohio veteran with a total rating would be escrowing a reduced one. Why the Kentucky test is narrower.
★★ If you do qualify, the exemption lowers the escrow, lowers the payment, and raises your residual income. On a Kentucky file the homestead exemption is therefore not only a tax matter. It feeds the underwriting. Whether you qualify.
★ Net effect: cheap houses push your residual income up and a narrow exemption pulls it back down. Which dominates depends on your rating, your age and your metro, which is exactly why it should be run rather than guessed.
What we decide and what we do not
We are a lender. The VA writes the thresholds and we apply them. We are not affiliated with the VA or any government agency, we do not set these figures, and we will not guess at yours.
Mike Certo, NMLS #260555. (480) 296-6513 · mcerto@cfmtg.com.
Frequently asked questions
What is VA residual income?
It is the money left each month after the mortgage payment, taxes, insurance, maintenance, utilities, other debts and tax withholding. The VA requires that what remains clears a threshold set by household size and geographic region. Conventional underwriting uses ratios and has no equivalent test.Does Kentucky help or hurt on the VA residual income test?
Both. Kentucky's low house prices mean a lower payment, which raises residual income. But Kentucky's homestead exemption requires age sixty-five or classification as totally disabled, so most working-age veterans with partial ratings escrow the full property tax bill where an Ohio veteran with a total rating would escrow less.Does Kentucky's homestead exemption affect VA residual income?
Yes, if you qualify for it. The exemption lowers the assessed value and therefore the property tax escrowed into the monthly payment, and residual income is measured after that payment. A veteran holding the exemption has a structurally lower payment and so more residual income.Why does this site not publish the VA residual income figures?
As a matter of policy rather than availability. The authority is VA Pamphlet 26-7, Chapter 4 on the VA's KnowVA portal. We do not reproduce underwriting tables that change, and a threshold tells you nothing without your household size, utilities, debts and tax withholding.Mike Certo · NMLS #260555 · Cornerstone First Mortgage NMLS #173855 · Equal Housing Lender. Educational content about VA home loan financing, not a loan commitment and not legal, tax or financial advice. Cornerstone First Mortgage is a private lender and is not affiliated with, endorsed by or acting on behalf of the U.S. Department of Veterans Affairs or any government agency. VA entitlement, funding-fee exemption and disability ratings are determined by the U.S. Department of Veterans Affairs. Kentucky's homestead exemption is established by section 170 of the Constitution of Kentucky and KRS 132.810 and is administered by county Property Valuation Administrators, not by Cornerstone; the amount is reset every two years by the Kentucky Department of Revenue and the tax effect depends on local rates. Housing market figures describe the twelve months to August 2026 and are not a forecast. Figures here carry the date we verified them against primary sources. All loans are subject to borrower, property and program qualification.