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Understanding VA Loans and Employment

When it comes to preapproval, a VA loan doesn’t require you to have a formal job. Instead, mortgage financiers have flexible standards that allow an independent evaluation of each applicant’s needs. The key to successful preapproval is proof of a stable and reliable income that will sustain you for the entire loan duration and possibly beyond.

Let’s delve deeper into other employment and economic contexts that may help you qualify for a VA loan.

Full-time Work for Less Than 2 Years

If you have been in formal employment for less than two years, you may be eligible for a VA home mortgage.

The primary indicators include:

  • Your months of service and employment history.
  • Your current training, skills, and credentials.
  • Confirmation from your organization that your contract is ongoing or likely to continue.

If you have less than one year of work experience, obtaining a VA home loan may be a tricky affair. You’ll need to provide an explanatory letter from your present employer demonstrating that your job is steady and expected to continue.

In addition, make sure to meet all the other VA loan criteria.

If a mortgage lender finds sufficient consistency between your Months of Service (MOS) and new employment, you’ll qualify for a loan.

Part-time Work

You should have a two-year legacy of consistent work if you work part-time before your income forms part of mortgage accreditation.

Lenders’ principles and prerequisites may differ here too. Some lenders don’t mind if you have a two-year work record at the same organization or distributed among multiple companies.

Self Employment

Are you a retired former officer in the military and currently operating a private enterprise? Then you can qualify for a VA Mortgage.

To qualify, you must have a solid record of business tax returns for at least two years.

Because earnings from self-employment may be less predictable than salary income, lenders may ask how you will overcome the challenge.

Therefore, you should be willing to demonstrate that your company is financially stable.

The following documents will come in handy when scrutinizing the stability of your business:

  • Updated income statement.
  • Current balance sheets.
  • Personal income tax returns.
  • Federal business tax returns for the past two years (if you run a corporation or partnership).
  • A list of all shareholders or associates.

Work in a Family Enterprise

If you work for a close relative or a family-owned enterprise, you may be eligible for a loan by submitting two years of tax returns.

In addition, you should have at least a 25% shareholdings stake in the business, as validated by a third-party provider.

Working in the Military

As an active military soldier, your latest statement of leave and earnings is enough proof of full-time work. You qualify as long as your contract in the military will last more than a year after closing on the loan deal.

If your military career ends within a year of the loan closure, you’ll have to demonstrate having a steady income in military service. In this case, you should have an offer for civilian employment, evidence of re-enlistment, or other confirmation of your capacity to pay the loan.

Income in Retirement

A veteran or active service member who is due for retirement can use their pension income to qualify for a VA home loan. However, lenders have varying perspectives on retirement income, so you should disclose it before signing up for the loan.

Some mortgage financiers may require written confirmation of your retirement start date and exact pension amount.

Moreover, if there will be a discrepancy exceeding 60 days starting from your last full-time salary and your first retirement payment, you should have cash reserves on hand.

Earnings From Commissions

You can qualify for a VA mortgage scheme using commission-based work if you have consistent earnings for two years.

If you earn commissions, the financial institution may require substantial paperwork, including:

  • An updated record of the actual amount you earn from commissions.
  • The terms of service; do you earn a basic pay plus commission or commission only?
  • Your payment schedule.
  • Two years of previous individual tax returns.

Housing Allowance (BAH)

Service members have a monthly stipend dubbed the ‘Basic Allowance for Housing,’ providing equitable access to affordable housing.

BAH rates depend on the location of your workstation and pay band and vary annually, according to economic trends in the housing market.

You can use your housing stipends to calculate income when applying for a mortgage.

VA Mortgage providers can use this basic income to determine how much you will receive. However, do recall that the housing stipend may not support your entire mortgage loan. Additionally, any variations in your spending that can impact your BAH rate can affect your capacity to pay your loan using the housing allowance.

Employment After Graduation

Are you a recent graduate? You may still be eligible for a VA loan without a long-standing work history.

Some financiers may require you to demonstrate a clear link between your field of study and post-graduate employment.

Additionally, you require a printed copy of your college transcripts and 30 days of payslips from your current employment.


Having a co-borrower involves using their earnings to boost your eligibility for a VA home mortgage.

A co-borrower will have a financial and legal obligation to repay the loan if you default. As a co-borrower, you may pick a spouse from the military or another veteran who is eligible for VA privileges.

However, there are prerequisites set for prospective co-borrowers. First, a co-borrower should live in the property with you as the principal residence.

Secondly, lenders will use your co-borrowers’ credit and debt history to determine your eligibility. A lousy credit score, mortgage defaults, or bankruptcies may jeopardize your preapproval chances.

Other Sources of Income

There are supplemental sources of funding that you can present to lending institutions for mortgage eligibility.

However, not all of them qualify as collateral. Consider having a proven history of obtaining payment or an assurance that you’ll continue earning from these revenue sources for at least three years.

They include;

  • Disability stipends
  • Social Security
  • Annuities
  • Childcare

VA Loans and Employment: What Are Your Options?

Lenders’ prerequisites for VA loans may differ, but your income level still plays a pivotal role.

Currently, lenders recognize various income types other than formal employment. Whether you opt for legal jobs, self-employment, part-time work, or earnings from commissions, you’ll have unlimited options to fund your loan repayment.

Consider visiting an approved financial institution to check for eligibility for your payment plan.

With over 50 years of mortgage industry experience, we are here to help you achieve the American dream of owning a home. We strive to provide the best education before, during, and after you buy a home. Our advice is based on experience with Phil Ganz and Team closing over One billion dollars and helping countless families.

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