VA Loans and Minimum Employment Requirements
First time home buyers looking for a house to purchase using a VA guaranteed mortgage have lots of questions. Some of the most common topics include employment standards and income requirements–how long does a buyer have to hold a job to qualify for a VA mortgage? Is there a minimum income level required for a successful VA loan application?
Eligible vets who are still serving on active duty generally don’t have to worry much about the employment requirements–it’s a simple matter to verify that the applicant is still on active duty. Those who are in the Guard, Reserves, or who have retired/separated from the military have different issues. How long does the VA require you to work that civilian job before it will accept your application?
The short answer is that the VA has flexible standards based on your situation. Lenders are required to verify a minimum of two years’ employment, but VA loan rules state, “If the applicant has been employed by the present employer less than 2 years…verify prior employment plus present employment covering a total of 2 years.”
It’s easy to see from that statement that the VA doesn’t have a set of restrictive standards when it comes to employment–but it does require some evidence in writing to bolster an application when the two-year minimum isn’t met.
The VA official site reminds loan officers they need to provide a written explanation why two years of employment cannot be verified and “compare any different types of employment verifications obtained (such as, Verification of Employment (VOE), pay stubs, and tax returns for consistency), and clarify any substantial differences in the data that would have a bearing on the qualification of the applicant.”
As for income minimums, there are none. Instead, the VA loan process uses a debt-to-income ratio standard instead. How much a borrower makes, how much he or she pays out in monthly obligations, plus the theoretical amount of a VA loan are reviewed to see if the borrower can afford the loan.
This is the standard used to approve the VA loan application (along with the usual credit check and other required considerations) rather than examining the specific amount a loan applicant makes per year and deciding on that basis.
About Joe Wallace
Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association.