VA guidelines

VA Loan Rules: Spousal Income

February 27, 2015

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VA Loan Rules: Spousal Income

107-logoOne frequently asked question about VA home loans involves whether spousal income can be counted on the VA loan application for the purposes of calculating the debt-to-income ratio.

It is easy to assume that a VA loan application with spousal income included would be stronger than without it; the combined incomes show more earning power and if the amount of debt is well within the VA requirements, it would seem like a logical choice. In fact, VA loan rules instruct lenders specifically, “Verify and treat the income of a spouse who will be contractually obligated on the loan the same as the veteran’s income.”

So why would a borrower wish to leave spousal income off of a VA home loan application? There could be many reasons, including a situation where the borrower anticipates a change in his or her marital status. But there are other reasons why spouse income may not necessarily be included. The Equal Credit Opportunity Act has rules instructing lenders NOT to ask about spouse income unless, according to the VA Lender’s Handbook, one or more of the following situations apply:

  • Spouse will be contractually liable.
  • Applicant is relying on the spouse’s income to qualify.
  • Applicant is relying on alimony, child support, or separate maintenance payments from the spouse or former spouse.
  • Applicant resides in a community property State or the security is in such a State.

The VA Lender’s Handbook adds, “In community property States, information concerning a spouse may be requested and considered in the same manner as for the applicant, even if the spouse will not be contractually obligated on the loan.”

Community property states are those states with laws that basically divide financial responsibilities for married couples evenly for all purchases and financial obligations made during the marriage.

In a community property state, the spouse’s income may be required data on the VA loan application form. But only verifiable income may be included; spouse income from eBay sales, hobbies or other activities that don’t meet the VA definition of “stable, reliable, and likely to continue” may not be included.

When it comes to alimony, child support, and maintenance payments, VA loan rules don’t force the borrower to list such payments as income. Borrowers who choose to leave out this information should know the payments must be identified and verified in order to count towards the borrower’s debt-to-income ratio.

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.

12 Comments
  1. kristina

    my husband is getting out we found a house and got everything in order and were to close in 7 days now they are saying that because he is getting out and going reserves he can have the loan but he still has three months left and now we may not have a place to go to when i head home on the first. is there anyway around this

    • Joe Wallace

      That's an issue you'd have to discuss with your lender.

  2. Jamie

    Is debt prior to marriage to a veteran taken into consideration or it after you are married to get a VA home loan?

    • Joe Wallace

      It would depend on the current nature of the debt. Can you be more specific?

      • Ashley

        What if the spouse has not on the loan, and has paid child support since before marriage? How can they still include that in MY debt if it comes out electronically from HIS paycheck, and they are not including his income on the loan? I'm so confused.

        • Joe Wallace

          That may depend on the laws of your state--community property law varies from state to state and what applies in one area doesn't necessarily apply in a different state. You would need to consult a lawyer or discuss your situation with a VA Regional Loan Center to see what's applicable in your state.

  3. Bill T.

    I served in the Navy as a medical corpsman between 1965 and 1969, with a combat tour with the US Marines in Vietnam in 1968. I am semi-retired -- a low income earner and disabled. My wife, who is 15 years my junior, is a high income earner. Could we apply for a VA guaraneed loan JOINTLY? In other words, could we offer my status as a veteran and her status as the family breadwinner in order to be considered for a VA loan? This scenario would assume that I would be duly recorded as a co-owner of the property and that my name would be recorded along side hers on the title. My wife is not a veteran and we reside in California. Any comment that would clarify our specific circumstances would be appreciated. Thank you, Bill T.

    • Joe Wallace

      Yes--VA loan rules do permit the veteran and spouse to apply together. You can apply or get pre-approved at www.valoans.com which is a private company and not a government agency.

  4. Irina Sweat

    My husband and i have gotten married he is retired medically vet, gets disability, but my credit is bad, the lender says that he doesnt make enough to be considered but even tho we have a joined bank account they refuse to use my income. Is there a law that can help us over that?

    • Joe Wallace

      That may depend on the laws of your state--we can't give legal advice, but you may wish to speak with another lender or an expert in your state laws regarding these situations.

  5. Ed Miller

    Is there an on a job requirement before my wife's income would be considered in qualifying to refinance an FHA to a VA loan?

    • Joe Wallace

      That may depend on a variety of issues including whether or not you are applying jointly for the loan, the job history of the spouse and related factors. The lender is likely to handle such issues on a case-by-case basis.

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