In North Carolina we have predatory lending laws which differ from other states. No matter what type mortgage loan you are applying for, we are required to “prove” that you have the ability to repay the loan. Because of this, Veteran’s who apply for a for a VA home loan, understand that employment and income are two important areas that we are required to verify. In many cases, income requirements for a VA Mortgage Loan varies depending on whether the Veteran is currently working as a Civilian, Retired from the Service, or Active Military.
As a VA Lender, we are required to verify both employment status and the nature of the income earned by that job. The Veteran’s Administration says that “Income analysis is not an exact science. It requires the lender to underwrite each loan on a case-by-case basis, using judgment, common sense, and flexibility, when warranted.”
What does this mean? Well, from our underwriting perspective, VA Loans require us to document the “probability of continued employment.” Our underwriters want to know that the income source is stable and reliable. We do this by reviewing the Veteran’s past employment record, and we also look pretty closely at the
“training, education, and qualifications for his/her position”
History of Employment
History of Employment is an area that is somewhat “vague” in the Veteran Administrations dialog, generally speaking, employment less than 12 months is not considered stable and reliable. However, it may be considered stable and reliable if the individual facts warrant such a conclusion.
If you were a Communications Officer in the Service, and you operated and worked on large pieces of Satellite equipment… and now you are either selling those satellite services, or repairing or operating that equipment – we would consider that the same training / line of work. If you were a Ranger, and now you are working for the Police Force, we would see that as a positive indicator. In both of those cases, we would likely be able to count your civilian income without waiting a full 12 months. Underwriting would require that you receive one full month’s salary in your new position prior to closing.
Bonuses, Overtime, Alimony / Child Support and Commission Income
If you’ve been in a Commission, Bonus or Overtime Income situation – then we would be required to show 24 months of income to count that Commission, Bonus or Overtime. We would also need to document that the additional income source is likely to continue for 36 months after closing. Sometimes companies do not want to say that “overtime” for instance, is going to continue. We do have language that we’ve used in the past that both Underwriting can live with, and most employers are okay with – so ask us to help you with this if it’s likely to be a problem.
Alimony and Child Support Income work similarly to Overtime and Bonus income. We must prove that you will receive the income for at least 3 full years after closing, and we must have documented receipt of already having received TIMELY payments for at least the last 12 months.
Part Time Income
If as a Policeman or Fireman you also have a “side job” as a painter. THAT part time income would not be used in qualifying you for a mortgage unless it has been both RECEIVED and DOCUMENTED on your tax return for 2 full years, or you are working for 2 years as an employee (not a contract employee) receiving W2 income. We run into this pretty often, and unfortunately, if you write off all of your income ( to avoid paying extra taxes) you will not be able to claim the income to qualify for a mortgage.
Gap In Employment Separation From The Military
If you want to purchase a home using your VA Loan benefits, and you are close to your separation date – this can be tricky. The key in these situations is the continuity of your new position from what you are currently doing in the Military. Our Underwriters will look at your Field Responsibilities or Military Training (the type of work you’re currently doing) and how it relates to your new job, your education, your MOS and other factors. For example, let’s say you’re less than a year of separating from the military — with that time frame, lenders are going to want to know about your post-separation employment.
Let’s say your your military expertise is logistics. If you leave the military and take a civilian job in logistics, you may not need be required to start your new job, and be in that position for over 12 months, to qualify for a home. But if you take a job in sales, that’s likely a different story. More Information on Income Sources
Because many of the income requirements for a VA Mortgage Loan are vague, and difficult to wade through, we offer specialized assistance specifically for veteran’s with questions about qualifying for a mortgage loan.Please call Steve and Eleanor Thorne at 919 649 5058