Employment and Income: How do VA Lenders Verify It?

You probably know that for any loan, you need to verify your income and employment. Sometimes this goes beyond providing the proof that you have of your employment and/or income. Your lenders sometimes want to get further verification that what you provided is true.

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The method that lenders use will depend on where you are in life. Are you still in the service or are you out? If you are still in the service, the VA lender has a specific method they must use to verify your income. If you are out of the service, they will verify your income the same way that they verify any other borrower’s income.

Keep reading to see what you might have to do for your VA loan.

Active Military Borrowers

Active military borrowers don’t have traditional paystubs and W-2s to provide lenders. Instead, they need to provide their Leaves and Earnings Statement. This shows lenders the information that they need including:

  • Your income
  • The deductions taken from your pay
  • The taxes you paid

Unlike the traditional borrower that needs income information that dates no more than 30 days ago, the Leaves and Earnings Statement can be dated as much as 120 days ago in order to count.

One more thing that lenders check on your Leaves and Earnings Statement, though, is how soon you will be discharged from the service. If you have less than 12 months left, you have to prove that you have some other type of income lined up for when you are out of the service. This is a general rule for any borrower because lenders want to see at least a 3-year continuance of employment to reduce the risk of default.

Non-Active Military Borrowers

If you have left the military and have a general job, you will verify your income just as any other borrower would do.

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What you’ll need is a history of income. Like a non-military borrower, lenders like to see a 2-year employment history. Since you were in the military, you don’t have to worry about being at the same job for 2 years or having experience in the industry for the last 2 years. You just need to prove that you made some type of income over that time, which can include your military income.

Like any non-military borrower, you will need to show the lender that you receive the income currently and that you received it in the past. You can do this with your paystubs covering the last 30 days of employment as well as any W-2s you received from the previous year of employment.

Sometimes lenders also call to talk to your employer to verify your income. This is a step that they take to verify that everything that you gave them or told them is true. Lenders are restricted regarding the questions they can ask, but they will verify the amount of your income and your employment dates at the very least.

What if you Aren’t Employed?

If you retired from the military and never got another job, you may still want to buy a home. If you have the retirement income to qualify, you may be able to do so. Just know that many lenders may require you to have reserves (money in savings) on hand in order to reduce your risk of default.

Some lenders even allow borrowers to qualify for a VA loan based on the money they have in their retirement account. If you have enough money to cover the term of the loan (up to 30 years) you may be able to qualify for the loan based on your retirement savings.

The bottom line is that you must prove that your income is stable and reliable no matter which way you receive it. If you are employed now, it’s probably the easiest way to qualify for a VA loan, but if you aren’t and you have the money to qualify you for the loan, you may still be eligible for a VA loan. Make sure that you shop around to find a lender that is willing to give you a loan given your situation, as not all VA lenders deal with retired borrowers, even military veterans.

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