VA Loan Income Requirements

How much VA home loan can you afford?

Income tax formThe following information is intended to provide you with an overview of the income requirements for a VA home loan. I strongly suggest you to obtain expert advice in order to assess if your income qualifies you for a VA home loan. The VA underwriting handbook has further information on the VA income requirements. Credit Underwriting Chapter 4.

The VA requires the mortgage underwriter to verify the Veteran's employment for a minimum of two years. If the Veteran's spouse is also included on the mortgage, the Veteran's spouse must also submit a two-year employment history.

In community property states, information about a spouse may be sought and reviewed in the same way as information about the applicant, even though the spouse is not legally committed on the loan.

The underwriter must verify prior employment plus present employment covering a total of 2 years, if the applicant has been employed by the current employer for less than 2 years.

In general, employment that is less than a year is not considered reliable or steady. It may, nevertheless, be regarded reliable and stable if the evidence supports such a judgment. Consider carefully the employer's assessment of the likelihood of ongoing employment, if one is supplied.

What Is Considered Supplemental Income?

Generally, income from overtime work, part-time jobs, second Jobs, and bonuses cannot be considered stable and reliable unless it has continued and is verified for 2 years. While the VA requires a two-year employment history for supplementary income, the lender may consider it effective income if it is verified for a minimum of 12 months and is used to cover debts of 10 to 24 months. The Veteran will need to provide an explanation.


VA Home Loan Commission Income

Generally, an applicant's commission income is deemed steady if it has been received for at least two years.

Applicants with less than two years of experience cannot be deemed steady unless the applicant has prior similar job and/or considerable specialized training.

Less than two years is unlikely to be considered stable and reliable. A thorough examination is necessary to consider income stable and reliable with less than a year's time.

VA Loan Requirements for Self Employed Borrowers

Income from self-employment is typically deemed steady if the applicant has been in business for at least two years.

Self-employment lasting less than two years cannot be deemed steady unless the applicant has prior similar work experience and/or considerable specialized training.

Less than one year is seldom considered stable. A thorough analysis is necessary to determine if an individual has had a consistent income for less than a year.

Active Military Applicant's Income (Base Pay)

The applicant's base pay may be considered as stable and reliable, unless the applicant is within 12 months of discharge from active duty.

Income from Service in the National Guard or Reserves

Income earned while serving in the Reserves or National Guard may be included in effective income if the applicant's active and Reserve/Guard service indicates a high probability of continuing Reserve/Guard income.

Alternatively, this income may be used to offset debt obligations with a term of between ten and twenty-four months.

Income of Recently Discharged Veterans

Analyzing the income of recently discharged Veterans is beyond the scope of this page.

VA Other Income

Additional types of revenue may be included as effective income if it is reasonable to assume that it will continue in the foreseeable future. Alternatively, determine that the revenue to balance any liabilities with a period of ten to twenty-four months.

Among the "other" sources of income that may be deemed effective income include, but are not limited to:

  • disability income,
  • dividends from stocks,
  • interest from savings accounts, bonds, and royalties
  • pension or other retirement benefits,

Conclusion

In conclusion, to be eligible for a VA home loan, applicants must meet the income requirements. The amount of money you make each month will determine how much you can borrow to purchase a home. Make sure to consult with a mortgage specialist to find out if you qualify for a VA home loan and learn more about the income requirements.

SOURCE: VA Home Loan Income Requirements

Recommended Reading

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