VA Loan Applications: Verification of Income
VA loan requirements include verification of income. Borrowers must show stable, reliable income that is likely to continue. The VA generally asks for at least two years worth of documentation showing such income and employment. But some borrowers can’t show two years of stable employment, especially recent military retirees and those who have started new careers after separating from the military. Can these VA loan applicants still get a VA home loan?
The answer depends on the circumstances. The VA rules do say that, in general, less than a year’s worth of employment is not considered to be stable and reliable. That said, the VA Lender’s Handbook states, “… 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.”
The last sentence of that guidance is an important hint for VA borrowers in such circumstances. A borrower may wish to request a new employer’s written feedback to supplement the VA loan application. In these cases, it’s best to ask the lender for advice before getting the employer to commit; chances are the lender will need such statements to come directly to the loan officer rather than from the veteran.
Much in the same way that borrowers aren’t permitted to furnish copies of credit reports or other third-party data needed to approve a VA mortgage loan, the lender may require an employer’s communication come directly to or via the bank.
Another factor in employment less than 12 months is the type of training or education needed for that position. In the eyes of the VA, a highly skilled, training-intensive position carries a greater prospect for long-term work. According to the VA rules, the lender must “…assess whether the applicant’s training and/or education equipped him or her with particular skills that relate directly to the duties of his/her current position. This generally applies to skilled positions. Examples include nurse, medical technician, lawyer, paralegal and computer systems analyst.”
The rules also say, “…an explanation of why income of less than 12 months duration was used must accompany the loan submission.”
As with other grey area aspects of some VA loan applications, the Department of Veterans Affairs offers the lender some flexibility in making the call. Borrowers should know the decision to approve or deny VA mortgage loan applications in these circumstances is not arbitrary, but done after an examination of the situation on a case-by-case basis.
Matthew Sherlock
Hello, I am in the active army on a 4 year enlistment, my MOS is 88M(wheeled vehicle operator). I am do to ETS July 29, 2011, I am trying to purchase a home using VA loan and seems people are telling me that I need a job offer or contract in my field of work in the army. I am planning to go to tractor trailer school and already have visited one for what kind of course they have. Even if I sign the contract to get my CDL A license, my lender is saying that is not good enough. Any advice as to what I can do?
Joe Wallace
The rules for income on VA loans include a requirement that the lender check to see if current income is "likely to continue". If you are having trouble getting a lender to approve VA loan in the interim between leaving the service and getting your first job as a civilian, try again once you have steady income at your first civilian job--your prospects should improve.
Justin Leavitt
Hello, I have a 4 year degree in teaching English/Spanish. I speak fluent Spanish, have a class A CDL and a wide range of skills and experience that qualify me for a number of jobs. I just got a new job working on a farm in Elberta, Utah about 3 weeks ago. I was hired as a harvest driver because of my wide variety of skills with the purpose and intent to move up into management as soon as possible. My broker is saying we have to wait the 90 day probationary period before we close on any loans because it says officially in paper that my job will last. I know that this job will turn into my permanent career. I have a house picked out now and am ready to close. Do I really have to wait the 90 days or can my boss just verify that the intention in hiring me is to move me into management? I would appreciate any advice that could get this loan Va loan approved as soon as possible, as I am ready to move. Thank you!
Joe Wallace
I can't speak for what your particular lender might approve or disapprove of--but your lender is definitely the person to ask since he or she has the power to approve or deny in this instance. If your boss is willing to put something in writing for your lender, that is definitely a step in the right direction...good luck!
Valerie Navarro
Hi my name is Valerie, I am a foster parent, have been for the last 11 years. My husband is retired Navy but has been employed with a local VA for 3 years. We are in the process of trying to get a VA loan, and was just told that they would not accept the foster reimbursement as income. This is almost 2/3 of our monthly income (over 10,000 per month). can you tell me why this would be true
Joe Wallace
Hi Valerie, thanks for your question--without more information it would be difficult to say for certain, but the key might lie in the nature of the income--you mentioned foster care pay iis labeled as "reimbursement" which would seem to imply that it's not income per se, but paying you back for funds already spent? If that's true it may not count as income because it doesnt add anything to your bottom line...again, I'm not stating that is definitely the case, just a speculation based on the available information.
ibrahin E Karroum
Hello guys, I am a 29 year old army vet and I'm looking to getting into a home. My credit score is about a 690 and I just started working as a technician at the salt river project in AZ, (electric and water company) I was discharged form the army in Feb. 2011 on a honorable discharge and after I got out, I was unemployed for 6 months and then started college full time until a month ago when I was hired by this company. My question is: would I be able to get a lender/va to approve me for a loan even-though I have only worked for this company for a month? And I can get my boss to write me a letter of employment also if nesesary. Thanks..
Joe Wallace
According to the VA rules, the lender must “…assess whether the applicant’s training and/or education equipped him or her with particular skills that relate directly to the duties of his/her current position. This generally applies to skilled positions. Examples include nurse, medical technician, lawyer, paralegal, and computer systems analyst.” The rules also say, “…an explanation of why income of less than 12 months duration was used must accompany the loan submission.” As with other grey area aspects of some VA loan applications, the Department of Veterans Affairs offers the lender some flexibility in making the call.
Brian Cordero
I am a recently discharged veteran that got a employment at a family owned business. The job position title is not a exact match to the new employment, but it does correlate on the set of skills used in the military, logistics, marketing, flow of materials, etc. I was denied a VA Loan due to "unable to establish SIGNIFICANT correlations" and "Family owned business is not a good enough source of income"(?) I am a W-2 employee at the business with no ownership of the business, and have significant experience in the line of work of this business. How can the lender state that family owned business is not a good source of income? I am paying taxes, I am a W-2 employee, I am a huge asset to the business. What is up with these lenders?
Marcus Puckett
Hello, I am a Network Security Engineer that has been in the IT field for eight years but only in my current position for one year. I've also just recently added a part time job which is a permanent position. Now that I have two jobs(full & part), would it be possible for both or my incomes to count when I apply for a VA loan? When I apply, I will have been at my part time job for six months and can guarantee I will continue to stay with both positions. Would this be considered stable income? Thanks
Joe Wallace
The lender would need to determine if the income is verifiable. It's possible depending on circumstances, but it won't be known until your lender can review the circumstances and make a determination. This is one of the areas with VA loans that depends greatly on lender standards.