VA Employment History Guidelines To Qualify For VA Loans

This BLOG On VA Employment History Guidelines To Qualify For VA Loans Was UPDATED On April 21st, 2019

VA Employment History Guidelines To Qualify For VA Loans

By Gustan Cho

VA Loans is the best loan program in the U.S. Unfortunately, not everyone can qualify for VA Home Loans. To be eligible for VA Loans, borrowers need to be either an active member of the U.S. Military and/or a Veteran of one of our Armed Services with a Certificate Of Eligibility (COE).  VA Employment History Guidelines To Qualify For VA Home Loans are similar to other loan programs. One of the mandatory requirements to qualify for a residential mortgage loan, whether it is VA, USDA, FHA or Conventional, mortgage lenders require a 2 year employment history.

  • However, VA, USDA,  HUD and Conventional mortgage guidelines do not require that borrowers have been continuously employed by the same employer for the past 2 years
  • HUD, Fannie Mae, Freddie Mac, VA, USDA all require borrowers provide a 2 year employment history on mortgage application
  • Under VA Employment History Guidelines, veteran home buyers can have gaps in employment
  • Employment Gaps is allowed as well as multiple jobs in the past 2 years
  • Many veteran borrowers are told by banks, credit unions, and mortgage bankers that they do not qualify for VA Loans because they have not had been employed for two years by the same employer
  • This can be true for a bank, credit union, mortgage banker, or other mortgage lender who have their own criteria, called lender overlays
  • Overlays are lending requirements that surpasses the minimum federal lending guidelines that is set by FHA, VA, USDA, Fannie Mae, and Freddie Mac
  • Portfolio and non-conforming lenders can have their own set of rules and lending criteria called overlays for their borrowers

VA Employment History Guidelines Versus Overlays

VA Employment History Guidelines Versus Overlays

In general borrowers needs to provide 2 year employment history. If borrowers has been unemployed for a period of time, the employment history prior to the mortgage applicant’s unemployment needs to be provided.

  • Here is case scenario on veteran borrowers case scenario:
  • If borrower has been unemployed for more than six months
  • Found a new full time job after six or more months of unemployment
  • Under VA Employment History Guidelines, veteran home buyers needs to be in his new full time job for at least six months in order to qualify for VA Home Loan
  • If veteran home buyer has been unemployed for six or less months and has gotten a new full time job, then the buyer will qualify for VA Loan with no waiting period
  • However, cannot close on VA Loan until 30 days of paycheck stubs have been provided to the mortgage lender
  • Written offer employment letter is required
  • Written Verification of employment stating that the mortgage applicant’s job stability will likely to continue for the next three years will be required

Here is a case scenario of 2-year employment history per VA Employment History Guidelines:

  • Veteran Home Buyer gets a new job
  • Has been on the job for at least six months
  • But has been unemployed for one year prior to getting a full-time job
  • Then 18 months of  past employment history needs to be provided prior unemployment status

What lenders are requiring is overall two-year employment history and not two-year continuous employment history.

Why Do Lenders Have Overlays On Longevity On Job?

Why Do Lenders Have Overlays On Longevity On Job?

Mortgage lenders like to see job longevity. This because statistics prove that longevity on a job means job and income stability and security:

  • Many lenders view job hoppers as unstable with regards to job security and income stability
  • All lenders want to see that borrowers have been in the same job for at least the past two years
  • But what they want to see and the real reality is different
  • Again, HUD ( Parent of FHA ), VA, USDA, Fannie Mae, Freddie Mac do not require 2 years of employment history where borrowers need to be with the same employer
  • All they require is 2-year employment history
  • Employment gaps and multiple jobs are allowed
  • Borrowers told that you do not qualify for VA Home Loan by a bank, credit union, or mortgage company because they do not have 2-year employment history from the same employer, find a different mortgage company with no overlays

The Gustan Cho Team has no mortgage overlays on VA Loans. Veteran Borrowers who need to qualify for VA Loans with a direct lender with zero overlays on VA Home Loans, please contact us at Gustan Cho Associates at 262-716-8151 or text us for faster response. Or email us at [email protected]

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