Income Sources: Qualifying for a VA Loan

You don’t necessarily need to be employed to qualify for a VA home loan.  We can count retirement income for Veterans, child support and Alimony can also be used to qualify for a VA mortgage loan too.  The important thing to remember when you are looking at Income Sources Qualifying for a VA Loan is this… we need Stable Employment that we can DOCUMENT.

If you are currently working as a Fireman, and a Painter that is AWESOME.  If you are not claiming all of your income as a Painter, then we will not be able to use that income to qualify you for a VA loan.  Ditto, if you write off all of your income as a Painter.

Qualified Income and VA Loans

Unfortunately, when you are applying for a VA loan, not all forms of employment are considered equal.

In the best of all possible worlds, you’ve been working the same job, either as a Veteran, or after you leave the military, for at least the last two years. That’s the kind of stable, reliable employment and income stream that VA Underwriters appreciate. Of course, that stability doesn’t guarantee you’ll get a loan, but it certainly doesn’t hurt as you begin the process.

The problem for many people, especially during this slow-moving economic recovery, is that you may not have been at your current job for least two years. And what about the hundreds upon hundreds of military members who separate from the service every year? Clearly they’re not going to have two years of steady employment upon hitting the civilian job market.

So are you simply out of luck without that two-year benchmark for employment?

No, there are situations where we CAN count your new employment income.  We will need to have a FULL 30 days of paystubs from your new employer, prior to closing, however.

Job Continuity and Gaps

The key is these situations is continuity regarding your field or profession. Our Underwriters will look at the type of work you’re currently doing and how it relates to your previous job, your education, your  MOS and other factors. For example, let’s say you’re within a year of separating from the military — with that time frame, lenders are going to want to know about your post-separation employment.

What if your military expertise is logistics. If you leave the military and take a civilian job in logistics, you may not need to meet any kind of time requirement. But if you take a job in sales, that’s likely a different story.

Other Sources of Income:  Qualifying for VA Loan

Surviving Spouses are also eligible in some cases for VA Home Loan benefit.  In fact, surviving spouses of veterans who died while in military service don’t need to submit any additional documentation apart from VA form 26-1817– if the spouse is receiving Dependency and Indemnity Compensation (DIC). This income is completely used in qualifying for a VA Loan.    Additionally, Congress recently made changes, and Surviving Spouses of Disabled Vets get special consideration, as well.

For Child Support payments to count towards qualifying for a VA Loan, it needs to have been received for at least 12 months.  So, if you just got separated  you’ll need to wait until you’ve received payments for 12 months before we can count that income.  If you don’t need this income to qualify VA loan underwriting requirements don’t force the borrower to list such payments as income.

In general, VA underwriters are looking for a score of at least 620 in order to pre-qualify you for a new mortgage. What you do with debt as you dissolve a marriage can genuinely hurt your scores.  Remember that quick claim deeds might not be the best answer – it could end up as a foreclosure on your credit report!  Be certain you take all precautions to keep your credit standing in good shape.

BAS and BAH income is being considered on an inconsistent basis.  A couple of other banks, will allow BAH and BAS (no matter where the property is located).  Any other military income (submarine income, seaman pay, etc) can be used if we prove that it’s going to continue based on your assigned duties.

Still OTHER banks are underwriting loans and allowing the BAH and BAS (regardless of location), but they require that we prove any additional income is likely to continue (read more).

Many Veteran’s don’t realize that there is actually no limit on the number of VA Guaranteed Home Loans a veteran can receive.  This typically surprises veteran borrowers who have used the program before.  In reality, a Veteran may qualify (in some cases) to borrow for a home using VA Loan benefits for a Second Home (especially if there is a child involved in a divorce).

Because many of the VA mortgage loan requirements are so 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