VA Underwriting

What the VA Needs From You

To begin the process of underwriting a VA loan, the VA will have to verify your income. If your spouse will be on the loan or has significant income from any source, or you live in a community property State, this applies to them, too. VA underwriters look for the following factors in your income.

• Stability: They will need to verify at least two years of past employment or receive an explanation of why that wasn’t possible.
• Sustainability: Especially if you have been employed less than two years, anything you can do to encourage your employer to confirm future, sustained employment will probably help the lender to consider you a good risk. You could also prove income potential with at least one year of experience and extensive specialized training that makes you more employable.
• Sufficiency: They’ll look at your expenses to see that you live within your means. You’ll also need to have sufficient cash to cover the closing costs, any money down, and the difference between the sales price and the loan amount if the sales price is more than the VA’s appraised value.

The VA will also require some documentation from you.

• All applicants must provide the previous two years of individual income tax returns and either the previous two bank statements or a recent VA Form 26-8497a (Request for Verification of Deposit).
• All applicants must submit either the past two forms W-2 or, for the self-employed, CPA-approved financial statements.
• Active military personnel will need to submit a recent Leave and Earnings Statement (LES), which can now be obtained through myPay (formerly known as E/MSS).
• If you are within 12 months of release from active duty, reserves, or National Guard, be prepared to provide proof of reenlistment or other formal offers of employment, and possibly a down payment.
• All applicants must disclose ownership of significant assets and debts.
• All applicants must authorize the lender to obtain a copy of their credit report and verification of any alimony or child support that has been included in the applicant’s income.
• If you received a Mortgage Credit Certificate from your state or local government, you’ll need to include a copy of that in the loan package.

Your credit report has a lot to do with the VA’s and the lender’s opinion of your risk level. It’s a good idea to fix errors on your credit report and catch up on delinquent accounts before you apply for your VA loan. Bankruptcies which were discharged more than two years before the time of application won’t affect their decision at all. If you don’t have a credit history, you’ll need to show evidence of good relationships with creditors such as utilities, insurance companies, or landlords.

Finally, if you own the federal government any money, they’re going to look at the nature of that debt, too. If you’re late with your payments or in default on a Federal loan of any type, you need to bring the account current before applying for a VA loan.

For more information, please visit your local VA office or a VA-approved lender near you.