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 approved for a VA loan with less than 2 years of employment can seem daunting. However it is possible if you understand the requirements. This comprehensive guide will explain everything you need to know about meeting the VA’s employment standards when applying for a VA home loan.
VA Loan Employment History Requirements
The Department of Veterans Affairs requires borrowers to show a 2-year history of stable income. This does not necessarily mean 2 years of employment at one job. The income history can be pieced together from multiple jobs, as long as there are no large gaps in employment.
Lenders typically have the same requirements when underwriting VA loans. They want to see that you have consistent income over the past couple years, even if it’s from different jobs.
What If You Don’t Have 2 Years of History?
If you don’t have a full 2-year history, don’t panic. The lender will look at other factors to determine if you are a good credit risk, including:
- The nature of your current job and your qualifications
- Length of time at current job
- Relatedness of current job to previous jobs or education
- Employer confirmation that the job will continue
- Strong credit history
Recent veterans, recent graduates, and those switching careers can still potentially qualify without meeting the standard 2-year requirement. Let’s look at some common scenarios.
VA Loan Eligibility for Recent Veterans
Veterans who left the military within the past couple years may not have 2 years of civilian employment. However, their military service and training likely make them qualified for civilian jobs.
Lenders can make the connection between a veteran’s MOS and their civilian employment. If there is good continuity, the veteran may be able to get approved with only a month or two on the civilian job.
VA Loans for Recent Graduates
Similar to veterans, recent grads may have limited work history. However, their education and training can give lenders confidence that they are prepared for a career.
With proof of related education and a short period of employment, a recent grad has a good chance at approval.
Changing Jobs with a VA Loan
These days, it’s common for people to change jobs every couple years. As long as your new job relates reasonably well to your old one, lenders can piece together your 2-year work history.
Significant gaps in employment or jumping between unrelated careers does make approval more challenging. But even then, strong credit and qualifications can sometimes outweigh the risks of an irregular work history.
Tips for Getting Approved with Limited History
If you don’t meet the standard 2-year requirement, here are some tips for improving your chances:
- Highlight qualifications: Education, training, certifications related to your job help show you are qualified and likely to succeed.
- Get employer verification: Written confirmation that your job will continue gives lenders confidence.
- Explain gaps: Have a good reason for any gaps in employment that shows they are unlikely to recur.
- Check your credit: Good credit helps offset risks associated with changing jobs.
- Build savings: Solid reserves support you even if income fluctuates.
- Put down a larger down payment: More equity reduces the risk for lenders.
While every lender looks at employment history a little differently, those strategies can help your case tremendously.
Special Cases for VA Loan Employment
There are a couple special cases when it comes to VA loan employment requirements:
Active Duty Military
Active duty service members can qualify for a VA loan based on their military income alone. No civilian employment history is required.
If you are purchasing within 12 months of leaving the military, lenders may want to see your plan for civilian employment. But it is not necessarily required.
Surviving Spouses
Surviving spouses of veterans can use their deceased partner’s VA eligibility for a loan. In this case, employment history requirements are based on the surviving spouse’s own employment.
They will need to demonstrate their own ability to repay the loan based on current income. Two years of employment is strongly recommended, but exceptions can be made case-by-case.
VA Loan Refinances
When refinancing an existing VA loan, the lender focuses on your income currently and in the near future. They do not emphasize long-term employment history as much.
As long as your current income is sufficient and stable, VA streamline and cash-out refinances can be approved without strict 2-year requirements.
Alternatives if You Don’t Qualify for VA Loan
If you really don’t meet VA employment requirements, consider these alternative options:
- FHA loan: Have more lenient employment requirements, lower credit score requirements
- USDA loan: Can use projected income in some cases, 100% financing
- Bank statement loans: Use bank deposits rather than employment
- Hard money loans: Asset-based loans that don’t emphasize income
- Rent for 2 years: Build longer employment history for future VA loan
So while the VA wants to see 2 years of consistent income, they will make exceptions. Understand the guidelines, highlight your qualifications, and thoroughly explain your situation to loan officers. With the right approach, less than 2 years of employment does not have to stop you from getting a VA home loan.
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.
VA Loan Employment Requirements ⚠️Avoid This Costly Mistake
FAQ
Can I get a VA loan without 2 years of employment?
Does VA require a 2 year work history?
Do you need proof of employment for VA loan?
Do VA loans have income requirements?
Do I need a certificate of eligibility for a VA loan?
A: You can apply for a VA loan with any mortgage lender that participates in the VA home loan program. At some point, you will need to get a Certificate of Eligibility from VA to prove to the lender that you are eligible for a VA loan. Q: How do I get a Certificate of Eligibility?
What are the eligibility requirements for a VA home loan?
To be eligible for a VA home loan, you must meet certain requirements.Here are the key eligibility criteria: 1.**Service History**: – **Service Members**: If you’ve served for at least 90 continuous
What if I Have Questions about my eligibility for a VA home loan?
If you have any questions about your eligibility for a VA home loan, please call your VA regional loan center at 877-827-3702 ( TTY: 711 ). We’re here Monday through Friday, 8:00 a.m. to 6:00 p.m. ET. Learn about VA home loan eligibility requirements for a VA direct or VA-backed loan.
What are the eligibility requirements for a VA-guaranteed home loan?
You must have satisfactory credit, sufficient income, and a valid Certificate of Eligibility (COE) to be eligible for a VA-guaranteed home loan. The home must be for your own personal occupancy. The eligibility requirements to obtain a COE are listed below for Servicemembers and Veterans, spouses, and other eligible beneficiaries.