Your VA Loan Application Data: Employment and Income
When an eligible VA borrower fills out an application for a VA home loan, employment and income are two important areas they are required to submit information to be verified by the borrower.
The participating VA lender is instructed by the Department of Veterans Affairs to verify both employment status and the nature of the income earned by that employment. According to VA Pamphlet 26-7, Chapter Four:
“Income analysis is not an exact science. It requires the lender to underwrite each loan on a case-by-case basis, using:
- Common sense, and
- Flexibility, when warranted.”
Where does that flexibility come in? According to Chapter Four, the lender must “Analyze the probability of continued employment (that is, whether income is stable and reliable) by examining the:
- Applicant’s past employment record,
- Applicant’s training, education, and qualifications for his/her position,
- Type of employment, and
- Employer’s confirmation of continued employment, if provided.”
The real flexibility in this process may be required in a variety of areas. “In the applicant’s current position, 2 years of employment is a positive indicator of continued employment.” That sounds very close to a specific rule about the length of employment, but the next sentence reveals, “It is not a required minimum and not always sufficient by itself to reach a conclusion on the probability of continued employment.”
Does the VA have any “set-in-stone” rules about employment and income? “Generally, employment less than 12 months is not considered stable and reliable. However, it may be considered stable and reliable if the individual facts warrant such a conclusion. Carefully consider the employer’s evaluation of the probability of continued employment, if provided.”
While the VA does take a closer look at the employment when it is 12 months or less, this factor is still not an automatic disqualifier if the borrower’s specific case warrants some added flexibility. Ask your loan officer if one of these situations applies to you–you may be surprised at what you may learn about the leeway you could qualify for in the right circumstances.