source:
  type: guide
  id: va-m26-7-ch04-t10
  authority: VA Lenders Handbook (VA Pamphlet 26-7), Chapter 4, Topic 10 — How to
    Analyze the Information on VA Form 26-6393,
  description: VA Lenders Handbook (VA Pamphlet 26-7), Chapter 4, Topic 10 — How to
    Analyze the Information on VA Form 26-6393,.
  coverage_tier: operative
obligations:
- id: va-m26-7-ch04-t10-full
  canonical_id: va-m26-7-ch04-t10-full
  section: VA Lenders Handbook (VA Pamphlet 26-7), Chapter 4, Topic 10 — How to Analyze
    the Information on VA Form 26-6393,
  type: do
  tags:
  - regulator-direct
  - va
  - va-handbook
  - corpus-expansion
  - tier-operative
  primary_source:
    tier: 1
    authority: VA Lenders Handbook (VA Pamphlet 26-7), Chapter 4, Topic 10 — How to
      Analyze the Information on VA Form 26-6393,
    source_class: va-handbook
    source_url: https://www.benefits.va.gov/warms/pam26_7.asp
    snapshot_id: 84a199d5bffee03b
    fetched_at: '2026-05-23T01:53:52Z'
    content_hash: sha256:ed2c25537e999a4e2d8f0edd102b19b58213237b1a9caa927fddfca170b14a9c
    paragraph_quote: '10. How to Analyze the Information on VA Form 26-6393, Loan
      Analysis Change Date a. Residual Income February 22, 2019 • This chapter has
      been revised in its entirety. VA’s minimum residual incomes (balance available
      for family support) are a guide. They should not automatically trigger approval
      or rejection of a loan. Instead, consider residual income in conjunction with
      all other credit factors. However, an inadequate residual income alone can be
      a basis for disapproving a loan. If residual income is marginal, look to other
      indicators such as the borrower’s credit history, and in particular, whether
      and how the borrower has previously handled similar housing expense. Consider
      the ages of the borrower’s dependents in determining the adequacy of residual
      income. b. Debt-to Income Ratio VA’s debt-to-income ratio is a ratio of total
      monthly debt payments (housing expense, installment debts, and other obligations
      listed in section D of VA Form 26-6393, Loan Analysis, 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 percent unless it is larger due solely to the existence of tax-free
      income which should be noted in the loan file), the loan may be approved with
      justification, by the underwriter''s supervisor, or • residual income exceeds
      the guideline by at least 20 percent. Loans closed automatically with a debt-to-income
      ratio greater than 41 percent: • Include 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 include the
      reason(s) for approving the loan and list the compensating factors justifying
      approval of the loan. Continued on next page VA Pamphlet 26-7, Revised Chapter
      4: Credit Underwriting 4-71 10. How to Analyze the Information on VA Form 26-6393,
      Loan Analysis, continued c. Credit History A poor credit history alone is a
      basis for disapproving a loan. If credit history is marginal, look to other
      factors such as residual income. d. Compensating Factors Compensating factors
      may affect the loan decision. These factors are especially important when reviewing
      loans which are marginal with respect to residual income or debt-to-income ratio.
      They cannot be used to compensate for unsatisfactory credit. Valid compensating
      factors should represent strengths rather than mere satisfaction of basic program
      requirements. For example, the fact that a borrower has sufficient assets for
      closing purposes, or meets the residual income guideline, is not a compensating
      factor. Valid compensating factors should logically be able to compensate (to
      some extent) for the identified weakness in the loan. For example, significant
      liquid assets may compensate for a residual income shortfall whereas long-term
      employment would not. Compensating factors include, but are not limited to the
      following: • excellent credit history, • conservative use of consumer credit,
      • minimal consumer debt, • long-term employment, • significant liquid assets,
      • sizable downpayment, • the existence of equity in refinancing loans, • little
      or no increase in shelter expense, • military benefits, • satisfactory homeownership
      experience, • high residual income, • low debt-to-income ratio, • tax credits
      for child care, and • tax benefits of home ownership Continued on next page
      VA Pamphlet 26-7, Revised Chapter 4: Credit Underwriting 4-72 10. How to Analyze
      the Information on VA Form 26-6393, Loan Analysis, continued e. Compare Previous
      and Proposed Shelter Expenses Closely scrutinize a case in which the borrower
      will be paying significantly higher shelter expenses than he or she currently
      pays. Consider the: • ability of the borrower to accumulate liquid assets, and
      • amount of debts incurred while paying a less amount for shelter. If a borrower’s
      application shows little or no reserves and excessive obligations, it may not
      be reasonable to conclude that a substantial increase in shelter expenses can
      be absorbed. f. Home Mortgage Disclosure Act (HMDA) As a result of releases
      of Home Mortgage Disclosure Act (HMDA) data, many lenders are increasingly concerned
      that they are taking all appropriate measures to assure access by minorities
      and lower income households to home mortgage loans. VA believes that it is important
      for lenders to be aware of how effectively the VA Home Loan Program can assist
      them in meeting this goal. Compatibility of VA Program with HMDA The no down
      payment feature is, of course, a primary advantage for individuals with low-to-moderate
      incomes. However, lenders should not overlook other aspects of the VA program
      that will help in underwriting loans for such borrowers. VA Credit Standards
      are written as guidelines and are meant to be interpreted and used just that
      way, taking into consideration all of an individual loan borrower’s financial,
      employment and family circumstances. Purpose of HMDA VA encourages underwriters
      to find ways to approve loan applications which ought to be approved but may
      not appear approvable upon direct application of the credit standards. Underwriters
      are encouraged to give consideration to every possible appropriate factor in
      seeking a proper basis for approving loan applications for every qualified Veteran.'
  judgment: false
