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Arizona VA Loan Underwriting Guidelines in Evaluating Your Employment History

04-11-2011About MortgagesEddie Knoell

If you are an active duty service member, veteran or the spouse of a veteran who died while on active duty or from an injury related to military service, you may be eligible for a VA Arizona mortgage loan. For specific information, you should talk to your Arizona mortgage broker or visit the VA’s website portal.

Underwriting Process

Part of the VA underwriting process requires that your VA lender verify your credit by ordering a credit report and reviewing at least two years of employment pay stubs and tax returns to make sure you have sufficient income to pay your Arizona mortgage payments and that your income is stable and reliable. You will need to explain any gaps in employment. You will need to sign a Request for Verification of Employment VA Form 26-8497 (VOE) allowing your current employer to furnish employment information to the lender. The lender will need to complete parts 1 through 6 of the form and sign it. Your current employer and previous employer, if you have not been employed by the same employer for the past two years, must complete either parts II and IV or part III and IV, sign it and return the original to the lender within 120 days (or 180 days for new construction) from the application approval date. You must also submit an original paycheck stub that is no older than 120 from the approval date (180 for new construction). Alternatively, the lender may accept fax and Internet information that verifies that your income is reliable and stable in lieu of the VOE.

Evaluation Criteria

The underwriter uses their judgment and experience in evaluating your employment history, whether your income is stable and reliable and how long you have been at your job. Typically, employment that is 12 months or less is not considered stable. Based upon each individual’s circumstances, the underwriter has the discretion and flexibility to consider all extenuating circumstances in making their determination whether the borrower’s income is stable. Let’s say a veteran has completed their active duty service and had been employed as a civilian by his current employer for 10 months, the underwriter may consider that employment stable and reliable with the probability that such employment will continue. If you have had frequent history of short term temporary employment during the past two years, the underwriter may not give you a favorable consideration, unless the reason for such short term employment was for career advancement in the same field or related field.

Self Employed Home Loan Applicants

Self-employed borrowers will need to show a current financial statement prepared or certified by an accountant or other tax professional or a financial statement submitted in a proper format such as a balance sheet or profit and loss statement. Signed federal tax returns for the last two years for the business must also be submitted. If you have been self-employed for two years, your income will be considered stable and reliable income.

In lieu of a VA Form 26-8497 VOE, an active duty military member can provide a military leave and earnings statement to the lender. National Guard or Reserve members must include their contract expiration date. If the loan is within a 12 year period prior to the military member’s term of service end date, the lender may require verification that the member is eligible to re-enlist or proof of re-enlistment or verification of a civilian employment offer.

For more information about employment underwriting guidelines for VA mortgages or Arizona mortgage rates, you should talk to your Arizona mortgage broker. The mortgage broker can provide you with the necessary VA application forms for your VA Arizona mortgage and can answer all your questions.

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Signature Home Loans LLC does not provide tax, legal, or accounting advice. This material has been prepared for informational purposes only. You should consult your own tax, legal, and accounting advisors before engaging in any transaction. Signature Home Loans NMLS 1007154, NMLS #210917 and 1618695. Equal housing lender.