Verification of Employment (VOE) is essential for VA lenders to see that you have a reliable source of income and can make your mortgage payments. Guidelines will vary by lender and borrowers should be aware that some employment scenarios can disrupt the VA loan process.
For would-be homebuyers who are still working, VA lenders will need to verify your employment situation before your loan can close.
Verification is at the heart of the mortgage process. Lenders will want to see that you have a steady income and make sure your employment situation hasn't changed as your loan closing nears.
While it isn't terribly common, some prospective borrowers lose or change jobs in the span between getting preapproved and receiving a Clear to Close. Lenders want to make sure you're still in a position to repay that mortgage on time every month. Any change to your employment and income situation is serious and could derail your VA loan.
Before issuing VA loan preapproval, lenders will usually need to look at pay stubs, W-2s and other income documents.
Guidelines and policies regarding Verification of Employment (VOE) can vary by lender. There are a couple of ways lenders can verify employment. Verbally or with a formal written document.
Lenders will look at:
For many borrowers with a single, consistent income stream, a Verbal Verification of Employment (VVOE) can suffice. This is usually accomplished via a phone call between the lender and a representative from your employer.
At Veterans United, we typically complete a VVOE no more than ten calendar days before closing for all hourly, salary, and commission income borrowers.
For self-employed borrowers, we will usually do the following within 30 days of closing:
Note that the date the borrowers sign the note is considered the closing date. Borrowers should keep the VOE in mind as they move through the mortgage process. Some jobs and employment scenarios can pose unique hurdles.
For example, lenders can run into difficulty verifying employment for teachers who want to close on a loan during a holiday break or over the summer. Talk with your loan officer if your work's nature might make it more challenging to contact your employer.
Depending on the lender, guidelines and policies on future income and employment can vary. Generally, lenders might be able to work with this situation if the new income starts within 30 days of closing. But they would need to take a deeper look at your overall situation to assess best.
There are times when lenders will conduct a full, written verification of employment. This is a more thorough vetting process, often associated with multiple streams of income.
At Veterans United, we would typically seek a full VOE if the borrower qualifies with multiple types of income, or if there's a discrepancy regarding the borrower's dates of employment. We would also require a full Verification of Employment for borrowers who receive handwritten paystubs or pursue a loan while on temporary leave from work.
The verification process is a bit different for prospective homebuyers still actively serving in the military. Several different forms may be needed, and additional types of effective income may be accounted for.
To verify active military employment, VA lenders will require a Leave and Earnings Statement (LES) instead of a VOE, which contains the same basic financial information. Active duty members can acquire their LES online by using the MyPay portal.
Base pay counts as stable and reliable as long as the service member isn’t within a year of release from active duty. Lenders can also include as effective income a service member’s Basic Allowance for Housing and occasionally other military allowances — clothing, flight pay, combat pay, and others — provided they’re verified and expected to continue.
Service members within a year of their release from active duty or the conclusion of their contract term can present a unique challenge.
If their discharge date falls within 12 months of the anticipated date of their loan closing, the lender has to take a few extra steps to satisfy the VA. It makes sense, considering there may be uncertainty regarding the type of job and income that awaits the recently discharged Veteran.
Given those potential question marks, lenders typically have to document at least one of the following five elements, if not more:
Talk with your loan officer immediately if your employment situation changes during the loan process.
Changes to your employment and income won't automatically stall your mortgage plans, but lenders will need to take a closer look to assess your ability to repay the loan.
VA loans allow Veterans to have a co-borrower on the loan. Here we break down co-borrower requirements and provide common scenarios around co-borrowing and joint VA loans.
Your Certificate of Eligibility (COE) verifies you meet the military service requirements for a VA loan. However, not everyone knows there are multiple ways to obtain your COE – some easier than others.