VA home loans may not require a downpayment, but applicants still need to prove their financial worthiness. Lenders can’t give out loans without knowing that borrowers will be able to pay the money back. Therefore, if you plan on buying a home with a VA loan, you will most likely need to show that you have steady income from your job. Below, we’ve discussed VA loan employment requirements in detail.
Getting a mortgage can be challenging, especially if you don’t have a long employment history with the same employer Many lenders want to see at least two years of steady employment before they’ll approve you for a home loan But what if you’re a veteran interested in a VA loan and you haven’t been at your job that long?
The good news is, it is possible to get approved for a VA loan with less than two years of employment history. The VA doesn’t require a specific length of employment to qualify. Instead, lenders look at your overall financial picture, including your income, assets, credit, and other factors.
In this article, we’ll break down the VA loan employment requirements, how lenders evaluate applicants with less than two years on the job, and tips for getting approved with a short employment history.
VA Loan Employment Requirements Overview
When it comes to income, the VA’s main requirement is that you show “stable and reliable” income. They don’t specify an exact length of employment. The VA underwriting guidelines state:
“It is the underwriter’s objective to identify and verify income available to meet: the mortgage payment, other shelter expenses, debts and obligations, and family living expenses.”
While the VA doesn’t mandate two years of employment, many lenders still prefer to see it. Why? Length of employment is generally a good indicator of future job stability.
But the VA recognizes that every borrower’s situation is different. Their guidelines encourage lenders to use “good judgment and flexibility” when evaluating employment history.
So even if you haven’t been at your job very long, you may still qualify, depending on your specific circumstances.
How Lenders Evaluate Short Employment Histories
When you apply for a VA loan with less than two years of employment, here are some of the factors lenders consider:
The nature of your job: Does your position, training, and work history support continued stable employment? For example, if you switched jobs but have stayed in the same industry, this helps demonstrate stability.
Length of employment: In general, 12 months of employment is viewed more positively than 6 months. While less than 12 months may be approved, more scrutiny is required.
Related experience: Experience in the same or related field helps compensate for short tenure with your current employer. Relevant education and training is also a plus.
Future prospects: Does your employer confirm you are likely to remain employed? Strong prospects for continued employment help offset short history.
Consistency of income: Lenders verify income with pay stubs, W-2s, and other documents. Consistency over time helps support approval.
Type of employment: Salaried jobs or employment with large, established companies may provide greater assurance of stability versus contract or seasonal work.
Essentially, lenders want to see indicators that your income is reliable and likely to continue. While two years in the same job can demonstrate that, it isn’t the only way.
Tips for Getting Approved With Less Than 2 Years of Employment
If you need a VA mortgage but haven’t been employed very long, here are some tips that can help your chances of getting approved:
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Highlight stability. Emphasize reasons your income and employment are stable, even if your tenure is short – such as qualifying experience, training, education, positive prospects, etc.
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Document income. Provide ample documentation like pay stubs, W-2s, and employer letters to validate your reliably earned income.
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Build your case. Clearly explain any employment gaps, career changes, and why your income can be expected to continue.
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Improve other factors. Offset your short history by strengthening areas like credit, assets, and down payment funds.
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Choose lenders carefully. Some are more flexible than others. Find one that actively works with your situation.
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Get pre-qualified. This helps identify any issues upfront so you can address them before formally applying.
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Consider co-borrowers. Adding someone with longer stable employment may help compensate for your short history.
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Leverage VA advantages. VA loans are easier to qualify for than conventional mortgages. Play up your VA benefits.
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Provide references. Letters from supervisors vouching for your reliability and continued employment can help.
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Communicate your unique situation. Clearly explain one-off circumstances that affected your tenure or caused changes.
It may take extra effort, but numerous veterans get approved with less than two years on the job every year by employing tactics like these.
Special Cases: Recent Grads and Separating Servicemembers
Two groups that often have limited or non-traditional employment histories are recent graduates and servicemembers transitioning off of active duty. Here’s guidance on their unique scenarios:
Recent graduates – Lenders can often accept shorter employment histories for borrowers new to the full-time workforce, if they graduated recently from school or training. However, graduates with degrees or backgrounds unrelated to their current job may need 12 months employment.
Separating servicemembers – Active duty members who are within 12 months of discharge can qualify before separation if they get a post-service job offer or other documented future income source, like VA disability pay. Otherwise, most lenders want 12 months of employment after separating to consider income stable.
In both cases, the key is providing lenders with extra assurance that employment and income will continue reliably into the future.
Self-Employed Borrowers Face Additional Scrutiny
VA loan requirements get stricter if you’re self-employed versus a W-2 wage earner. Lenders generally want to see 2 years of stable self-employment income to consider it effective and use it to qualify you.
That said, they can approve less time if your individual situation warrants it. For example, if you have 5+ years experience in the field prior to starting your own business. Or one year of self-employment income is very consistent with two prior years of W-2 earnings.
In any case, expect lenders to document and closely analyze factors like your qualifications, length of time self-employed, earnings consistency, down payment funds, and business income verifications. Sole proprietors also must supply personal tax returns. The more you can demonstrate sound business and earning history, the better.
When Length of Employment Is Not a Factor
There are some cases where VA loan requirements essentially waive any minimum length of employment, including:
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Active duty military getting a VA loan – Active duty income is considered stable and reliable regardless of length of service.
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Veterans with service-connected disability – VA disability income does not need to be documented for continuance, so there is no employment length requirement.
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Retired veterans – Retirement income is reliable regardless of when retirement started.
So if you’re in one of those groups, you likely can get a VA home loan approval without any minimum employment history. Of course, you still must meet other requirements like sufficient income, credit health and VA entitlement.
How to Check Your Specific VA Loan Eligibility
As we’ve discussed, VA underwriters evaluate employment circumstances individually. There’s no universal rule on exactly how long you must be employed to get approved.
That’s why the best way to check if you can qualify for a VA loan is to get pre-approved by a reputable VA lender.
Pre-approval involves the lender reviewing your financial profile – income, employment, credit, etc. – and determining if you meet VA requirements.
Many lenders will issue pre-approvals at no cost and with no obligation. To get started, you can reach out to a VA loan specialist for assistance.
Takeaway: VA Loans Provide Options for Shorter Employment History
The bottom line is you can qualify for a VA loan with less than two years on the job, if lenders can verify you have stable income that is likely to continue.
While establishing a two-year history with one employer is ideal, it’s not an absolute requirement. The VA recognizes that everyone’s circumstances are different.
If you’re a veteran who needs a mortgage but don’t have years of employment tenure, explore your options. Some VA lenders are more flexible than others when it comes to limited history.
And be prepared to provide ample documentation on your qualifications, experience, education, income sources, and prospects for continued employment.
The better you can demonstrate your income reliability, the higher your chances of approval. With the right approach, you can get a VA home loan even with under two years of steady employment.
What Are the Employment Requirements for VA Loans?
Generally speaking, lenders want to see that VA applicants have at least two years of steady employment in the same job position. However, this is not always practical due to the nature of VA loans. Applicants may be transitioning out of the military into civilian life, in the middle of a career change, or receiving disability income. Therefore, there is some flexibility allowed. Each applicant is assessed on a case-by-case basis.
Overall, your lender wants to see that you have stable, consistent income and will be able to make your mortgage payments. If you have a steady, regular source of income and a good history of being able to remain employed, you are considered less of a risk.
Verification of Employment for VA Loans
In addition to verifying your income, your VA lender will also want to confirm your employment status. This is referred to as a VOE, or Verification of Employment. A Verification of Employment can be performed in a variety of ways such as:
- Verbal verification: Most of the time, verbal verification is sufficient for a VA loan. In this case, your lender will call your employer and verify your employment status.
- Written verification: In some cases, a lender may require a special document or written verification that confirms an applicant’s employment situation.
- Active duty verification: If you are active duty military, then your VOE will look a little different. You will need to provide your lender with a copy of your Leave and Earnings Statement so they can verify your employment.
- Special documents: If you are receiving Social Security or disability, your lender will most likely request a copy of your awards letter. If you have recently left the military and been offered a new job, your lender may be able to use your offer letter to confirm your employment status.