VA Loan Employment and Income Rules: A Reader QuestionA reader asks, “I’m in the process of closing on the house. However, I was delayed in that process due to my wife finding a new job close to where we will be. My lender states the VA loan requires a month’s worth of paychecks not including orientation and or training. My question is that true? I have been employed for over two years and qualify but my wife and I are signing jointly. Is there a need to wait for my wife to produce two paychecks before closing?Or is this more of lender issue? Where can I find policies or FAQs about the VA loan process?”
To answer this question, we need to review the VA instructions to the lender regarding income rules and verification as printed in VA Pamphlet 26-7, The VA Lender’s Handbook. Chapter Four instructs the lender:
“Identify and verify income available to meet:
• the mortgage payment,
• other shelter expenses,
• debts and obligations, and
• family living expenses.
Evaluate whether verified income is:
• stable and reliable,
• anticipated to continue during the foreseeable future, and
• sufficient in amount.”
Chapter Four also instructs the lender to, “Verify and treat the income of a spouse who will be contractually obligated on the loan the same as the veteran’s income.” Generally the VA wants the lender to verify two total years of employment at a minimum. That does not necessarily mean two years with the same employer. According to Chapter Four:
“Short-term employment in a present position combined with frequent changes of employment in the recent past requires special consideration to determine stability of income. Analyze the reasons for the changes in employment. Give favorable consideration to changes for the purpose of career advancement in the same or related field. Favorable consideration may not be possible for changes:
• with no apparent betterment to the applicant, and
• from one line of work to another.”
VA loan rules in this section of Chapter Four don’t specifically include a one-month requirement as mentioned in the reader question, so this could be a lender requirement instead. Lenders are free to add more strict income, employment, or credit standards above and beyond the minimums required by FHA loan rules. In cases like these it may be necessary to discuss the situation with the loan officer.
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