Page 12 - The Panozzo Team - VA Home Loan Guide

WHAT IS THE VA HOME LOAN GUARANTY? (CONT.)

- Effective Income – Income is considered to be effective when it is determined to be
verifiable, stable and reliable, and anticipated to continue for the foreseeable future.
Income analysis is not an exact science. It requires the lender to underwrite each
loan on a case-by-case basis, using good judgement and flexibility when warranted.

• Income from non-military employment – We as the lender are looking for a two-year
employment history. If the veteran has been employed at the present employer for
less than 2 years we’re looking for:
- Previous two years employment, plus present employment covering 2 years.

*Typically, paystubs and W2’s can help us determine two-year employment history
along with effective income.

BORROWERS EMPLOYED FOR LESS THAN 12 MONTHS.

- Generally, employment less than 12 months is not considered stable and reliable.
However, the lender may consider the employment stable and reliable if the facts
and documentation warrant such a conclusion. If the borrower’s past employment,
training, and/or education equipped him or her with particular skills that relate
directly to the duties of their current position.
- If the probability of continued employment is high based on these factors, then the
lender may consider including the income.

- If the borrower is starting a new job, the lender can typically accept a valid offer of
employment which will begin at or after the anticipated date of closing.
- Second jobs, overtime, part time, bonus income – Typically the lender will require
two year’s history to count any of this income.

SELF-EMPLOYED BORROWERS

- Generally, income from self-employment is considered stable and reliable when
the borrower has obtained such income for at least 2 years. Less than 2 years
cannot usually be considered stable unless the borrower has had previous related
employment and/or specialized training. Less than 1 year can rarely qualify. If the
borrower has been self-employed for less than 2 years we have to look at it on a
case-by-case basis.

VA SERVICE-CONNECTED DISABILITY

- Service-connected disability is automatically reflected on the VA Certificate of
Eligibility and can be used as effective income. It can also be grossed up 25%
since it’s non-taxed

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