VA Income Requirements for Loans: Verifiable Income Only
In our previous post we discussed VA loan requirements for employment and income. One thing we mentioned briefly are the VA income requirements that lenders use only “verifiable” income to calculate the borrower’s creditworthiness, plus the debt-to-income ratio. What does this mean? What is “verifiable income”?
VA Pamphlet 26-7 Chapter Four describes the VA income requirements. For non-military income, the lender must verify the borrower has (in general) a two year minimum employment history, not necessarily with the same employer or company the entire time. For that income, the lender must determine whether it can be used to qualify for the VA loan, as described in Chapter Four which instructs the loan officer:
“Identify and verify income available to meet:
- The mortgage payment
- Shelter expenses
- Debts and obligations
- Family living expenses.
Evaluate whether verified income is:
- Stable and reliable
- Anticipated to continue during the foreseeable future, and sufficient in amount.”
The lender is not permitted to use income that is not stable, reliable and likely to continue. That’s why GI Bill housing stipends can’t be used to qualify (those stipends run out after a specified time and are therefore not considered likely to continue) and why part-time income from activities like online sales on eBay, Etsy.com, etc. can’t be used, either. (The lender may use discretion in determining income from full-time business concerns that include these sales avenues–talk to your loan officer to learn more.)
Child support, alimony, some types of public assistance, trust fund income and other types of non-job income MAY be counted if it meets VA standards.
Spouse income may also be counted. Chapter Four says, “Verify and treat the income of a spouse who will be contractually obligated on the loan the same as the veteran’s income.” The lender is required to comply with the Equal Credit Opportunity Act in such cases when the spouse is not considered contractually obliged on the loan. However, Chapter Four says, “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.”
To verify income and income stability, the VA lender will request pay stubs, tax information, and other data from the applicant. Borrowers should expect to provide tax forms and the most recent pay stubs from any income they wish to use to qualify for the VA mortgage loan.
As we’ve mentioned before, there is no VA minimum income dollar amount set for loan approval, the lender must determine the borrower’s income amount, the debt-to-income ratio, and whether the borrower can afford the loan with the mortgage payment added to the current debt-to-income ratio.
Do you have questions about VA home loans? Ask us in the comments section.