Residual Income

Residual Income

What Does Residual Income Mean?

In personal finance, the amount of income remaining after all personal debts, including mortgage obligations, have been factored in; this calculation usually is done on a monthly basis, after the monthly bills and debts have been paid. Also, once a mortgage is paid off, the income that had been put toward the mortgage payments becomes residual income.

Investopedia explains Residual Income

Residual income is often an important component of securing a loan. The loan institution usually assesses an individual's residual income before granting the loan. If the individual requesting the loan has sufficient residual income to take on another loan, the lending institution is more likely to grant the loan once it affirms that the borrower will have sufficient funds to make the monthly loan payments.

Related Terms:
• Debt
• Debt Financing
•Income Statement
• Mortgage
• Net Income