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VA Loans and Spouse Income

One of the financial hurdles some first-time home buyers struggle to overcome when purchasing a new home is having enough qualifying income. When it comes to VA home loans, the buyer may be interested in adding a spouse’s income to the mix to make the overall financial picture more attractive.

As with all other parts of the VA loan underwriting process, this part of the application is controlled by Department of Veterans Affairs regulations. What does the VA allow with regard to spouse income?

The VA Lender’s handbook makes it easy to understand. The opening line of the VA instructions to loan officers states plainly, “Verify and treat the income of a spouse who will be contractually obligated on the loan the same as the veteran’s income.”

The key phrase here is “contractually obligated”. The VA won’t consider spouse income unless the spouse is to be obligated to pay on the VA mortgage. Two incomes are definitely better than one, but the spouse must be willing to sign on the dotted line. It’s important to make a distinction between “spouse income” and alimony, child support or other payments coming to the borrower from a spouse or former spouse.

These are considered legitimate, verifiable income under the right circumstances (official documents such as a court order or a written agreement to pay are important for verification purposes) and considered part of the applicant’s financial picture rather than “spouse income”.

There is an exception to the spouse income rule, one that doesn’t apply across the board but does change the equation for those it affects. Some states in the USA are “community property” states, which means a married couple’s possessions and income are legally combined–the couple owns the property regardless of who actually purchased it.

In these cases, spouse income should be included and may even be required as part of the VA loan application. The community property status of the home once its purchased means the spouse is part owner of the property, so his or her income must be included on the application.

Bruce Reichstein

About Bruce Reichstein

Bruce Reichstein is an Expert on (VA) Military/Veteran Home Loan Guidelines for over 26 years — www.VALoans.com. He is an experienced VA Loan Mortgage Banker who is passionate about assisting US Military Veterans utilize their Veteran Eligibility to purchase a home.

7 Responses to VA Loans and Spouse Income

  1. Gregory Blakeney says:

    I am an unemployed vet; Can i use my wife income(ssi) to obtain a VA Loan to purshase a home?

    • Joe Wallace says:

      Hi Gregory, thanks for your question. Is your wife a veteran also?

      • Joe Wallace says:

        I would encourage you to get in touch with the VA directly as your situation is quite unique. The VA does state:

        “By law, VA may only guarantee a loan when it is possible to determine that the veteran:

        * is a satisfactory credit risk, and
        * has present and anticipated income that bears a proper relation to the contemplated terms of repayment.”

  2. Karen says:

    My husband is a veteran and we would like to apply for a VA Home loan but I’m unemployed and have student loans. Can he apply without adding me to lower our DTI?

  3. Chris says:

    Can I use my wife’s income if she has been employed less than 2 years? And also, can I use child support she is receiving for another child in obtaining a better chance at approval?

    • Joe Wallace says:

      This is a complex issue that is dependent on several factors including whether the borrower lives in a community property state and whether the spouse is obligated on the new loan or not.

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