Credit will continue to play a crucial role in your ability to secure a VA home loan. In the current lending environment, VA lenders are generally looking for a score of at least 620 in order to prequalify you for a mortgage.
If you’re worried about your credit, Veterans United’s Lighthouse program can help you get on the right track.
But there’s another incredibly critical factor that both confuses and confounds many borrowers: employment. You certainly don’t need to have a job in order to obtain a VA-backed loan, as countless retired veterans can attest. But those folks also have the retirement income, alongside other potential sources of effective income, to satisfy lenders. Otherwise, it can be incredibly difficult, if not downright impossible, to get a VA loan without employment.
What can be frustrating is this: Not all forms of employment are equal when it comes to getting a home loan.
Two Years is Golden
In the best of all possible worlds, you’ve been working the same job for at least the last two years when you come to a VA lender looking for loan preapproval. That’s the kind of stable, reliable employment and income stream that makes loan officers smile. Of course, that stability doesn’t guarantee you’ll get a loan, but it certainly doesn’t hurt as you begin the process.
The problem is many people, especially during this slow-moving economic recovery, haven’t been at their job for at least two years. And what about the hundreds upon hundreds of military members who separate from the service every year? Clearly they’re not going to have two years of steady employment upon hitting the civilian job market.
So are you simply out of luck without that two-year benchmark for employment? The answer is not necessarily.
Job Continuity and Gaps
The key in these situations is continuity regarding your field or profession. Lenders will look at the type of work you’re currently doing and how it relates to your previous job, your education, your MOS and other factors. For example, let’s say you’re within a year of separating from the military — with that time frame, lenders are going to want to know about your post-separation employment. And let’s say your military expertise is logistics. If you leave the military and take a civilian job in logistics, you may not need to meet any kind of time requirement. But if you take a job in sales, that’s likely a different story.
Job gaps will also be treated differently depending on the lender. Every person’s scenario is different, so it’s always best to check with a lender. But, in general, a gap in employment will require you to be back on the job for a suitable amount of time. For example, if you’re out of work for six months, you may need to be back on the job for six months before a lender will move forward.
Again, every job scenario has its own wrinkles and details. In some cases you might be able to pursue a VA loan after just a single year of steady employment. You can talk with a Veterans United loan specialist at 888-212-1958 about employment and what might be possible using your VA loan entitlement.
We’ve also got an extensive, in-depth resource guide on VA loans and employment in our Resource Library.
Photo courtesy Muffet