You’ve provided your Leave and Earnings Statement to get your VA loan, and isn’t that proof enough that you’re currently serving? The short answer: no.
You also have to provide a statement of service whether you’re on active duty or in the reserves. A statement of service provides several pieces of information that aren’t found on your LES. When an underwriter looks at your mortgage application she will need both documents to get the entire picture of your service.
While a LES covers your pay and wages, a statement of service covers other administrative information that can affect whether you can use your LES income for home loan purposes.
How to Make Your LES Income Count
If you’re close to the end of your contract, an underwriter will pay very close attention to your separation date. In order to use your LES income, one of three things must occur:
- You have to close on a home loan at least 12 months before your separation date;
- You have to provide evidence of employment after separation; or
- You have to provide information on reenlistment.
Reenlistment information will generally include two documents: A sentence on your statement of service regarding whether you are eligible to reenlist, and a separate document stating your intent to reenlist. Some lenders may also require you provide proof of reenlistment before allowing you to use this income.
The 12 month cutoff from separation is frustrating for planning purposes but it makes sense – income needs to be stable and continuous to count it for loan purposes. If you’re getting out of the military in three months and don’t have a job lined up it’ll be difficult to make a mortgage payment. To an underwriter, allowing a borrower to use income that will only continue for another 3 months is too risky.
Typical Letter Requirements
There isn’t a standard military form for the statement of service. But in general, the statement of service compiles several pieces of significant information:
- Official Letterhead
- Full Name of Borrower
- Social Security Number
- Date of Birth
- Branch of Service
- Date Entered on Active Duty
- Current Date of Separation
- Unit of Assignment and Current Duty Location
- Duration of Time Lost, if any
- Last Discharge
- Type of Discharge
- Whether you are barred or flagged from continued service
- If reserves, whether the borrower is an “active” reservist or inactive status
- Whether you are eligible to reenlist
- Information Current as of Date
- Signature and Title of Signer
If you’re preparing to apply for a VA home loan, it would be a good idea to print this list off and talk with your supervisor or commanding officer. You need to determine your best point of contact for this request. As you are well aware, many of these service members are very busy, and the more time you can give them to fulfill your request, the better.
Photo courtesy of Andrew Moore