VA Loans, Income Verification and Frequent Job Changes
In recent posts we’ve discussed the rules for VA home loans where income verification is concerned. Self-employed, freelance, and recently discharged veterans are all able to be considered for VA home loans even when their income may not necessarily conform to the traditional model of employment and steady income. Each situation is examined on a case-by-case basis, with the lender given a certain amount of leeway to interpret the income and employment information available.
But how does the lender process a VA loan application for someone who has had frequent job changes? The VA rules state that a record of frequent job changes and short-term income require additional review. The lender must analyze the reasons for the frequent changes in employment. For example, if a borrower works as a freelancer under short-term contracts for a company that shows a record of consistently or seasonally hiring the applicant, a lender may recognize that as an ongoing relationship and accept the income as verifiable.
But a borrower who simply works at a job for a short period of time, then moves on has a different type of issue–one the VA may not look favorably upon based on this quote from the VA Lender’s Handbook; “Favorable consideration may not be possible for changes…with no apparent betterment to the applicant, and from one line of work to another.”
Compare that to the instructions to lenders about another type of job change; “…give favorable consideration to changes for the purpose of career advancement in the same or related field.”
It’s clear that the VA is more concerned with the reasons behind the job change than the fact that an applicant has changed jobs a few times. Borrowers are required to show habits of consistent on-time bill payments and debt management; the same is also true for those with unconventional, freelance or other non-traditional jobs.
The VA is more interested in the reliability and dependability of an applicant–job activity that shows a habit of upward mobility and responsibility are viewed favorably. Frequent job changes with no real reason or benefit reflect poorly on the applicant.