VA home loans are a great option for eligible military veterans. However, what about someone in the military reserves? Are they eligible for a VA home loan to buy or refinance their Phoenix area home? Good news, the answer is YES! However, Reservists must tread carefully!
Income From the Reserves Can be Used
Reservist’s income must be looked through with a fine tooth comb. Specifically, income type and amount along with LES dates must be carefully analyzed for military reservists.
Reservists income is allowed on VA mortgage applications. However, specific income based criteria (explained below) must be met. The challenge with a Reservist’s income is their duty. Their time on the job is typically defined in fixed terms. In other words, their service/employment has a specific ending date.
Terminal employment is not an underwriter’s favorite type of employment. This is exactly why having a proficient VA loan officer is important. After-all, we owe our veterans a proper and stress free VA home loan experience.
Including Reserves Income on a VA Loan: It’s a Simple Process
As long as the “ETS date” on a veterans “LES” is at least 12 months out from their projected closing date you are fine. Confused? Let’s translate this into non acronym English (although I am guessing you military veterans are tracking just fine).
Military pay-stubs are often called Leave and Earnings Statements or “LES”. They are very structured, organized and include a slew of useful data. In fact, all the info needed to initially determine if a Reservist’s income can be used is right at the top of an LES. The LES has a section labeled “ETS.” ETS stands for “Expiration Term of Service Date (in other words – the date their work in the Reserves is set to conclude).
As long as a veteran’s ETS date is 12 months or more away (going forward) from the date their Arizona VA home loan will fund the Reservists income may be used to qualify the veteran. For example if the veteran’s loan funds on 05/15/2013 and their ETS date is 05/15/2014 the Reservists income is allowed.
What if ETS is less than 12 months out?
What if a Reservist only has 6 months between now and their ETS date? In this case a VA mortgage lender can utilize something called as a “statement of service.”
The statement of service (written by the veteran’s commanding officer) will need to state the veteran is re-enlisting AND that he/she is eligible to re-enlist.
There you have it! A quick “how to” on including a Reservist’s income on a VA mortgage application.
By Jeremy House