Residual Income

AAA

DEFINITION of 'Residual Income'

The amount of income that an individual has after all personal debts, including the mortgage, have been paid. This calculation is usually made on a monthly basis, after the monthly bills and debts are paid. Also, when a mortgage has been paid off in its entirety, the income that individual had been putting toward the mortgage becomes residual income.

INVESTOPEDIA EXPLAINS 'Residual Income'

Residual income is often an important component of securing a loan. The loaning institution usually assesses the amount of residual income an individual has left after paying off other debts each month. If the individual requesting the loan has sufficient residual income to take on additional debt, the loaning institution will be more likely to grant the loan because having an adequate amount of residual income will ensure that the borrower has sufficient funds to make the loan payment each month.

VIDEO

RELATED TERMS
  1. Mortgage

    A debt instrument, secured by the collateral of specified real ...
  2. Debt

    An amount of money borrowed by one party from another. Many corporations/individuals ...
  3. Interest

    1. The charge for the privilege of borrowing money, typically ...
  4. Debt Service

    The cash that is required for a particular time period to cover ...
  5. Loan

    The act of giving money, property or other material goods to ...
  6. Disposable Income

    The amount of money that households have available for spending ...
Related Articles
  1. Budgeting

    The Beauty Of Budgeting

  2. Options & Futures

    Top 7 Most Common Financial Mistakes

  3. Trading Strategies

    How do traders interpret a Downside ...

  4. FHA loans are often a good alternative for those who have trouble obtaining a conventional mortgage, although you do have to pay an insurance premium.
    Home & Auto

    Mortgage For A Manufactured Home? Try ...

Hot Definitions
  1. Flight To Quality

    The action of investors moving their capital away from riskier investments to the safest possible investment vehicles. This ...
  2. Capitulation

    When investors give up any previous gains in stock price by selling equities in an effort to get out of the market and into ...
  3. Turkey

    Slang for an investment that yields disappointing results or turns out worse than expected. Failed business deals, securities ...
  4. Conduit Issuer

    An organization, usually a government agency, that issues municipal securities to raise capital for revenue-generating projects ...
  5. Financing Entity

    The party in a financing arrangement that provides money, property, or another asset to an intermediate entity or financed ...
  6. Hyperinflation

    Extremely rapid or out of control inflation. There is no precise numerical definition to hyperinflation. Hyperinflation is ...
Trading Center