VA Loan Articles
News, updates, and explanations to keep you informed.
What is Verifiable Income?
If you're planning on buying a house and want to apply for a VA home loan you'll be required to provide several kinds of proof to move the application process forward. Some of the proof is needed to establish VA loan eligibility and other proof is needed to get the loan itself approved. You may be familiar with the conventional loan process, but the Department of Veterans Affairs has specific rules unique to VA mortgages.
Did you know the lender is required to verify the borrower's income on a VA home loan? If you have experience with conventional loans that won't surprise you--it's a standard part of the lending process. But what does that income have to cover? It's not just the monthly mortgage and mortgage insurance premiums where applicable--for VA home loans, income must be available to pay those items AND your debts, family living expenses and something defined by the VA as "other shelter expenses."
Those are all factors the lender must use when examining a borrower’s debt-to-income ratio. That ratio cannot exceed 41%, although in some cases additional income
may give the VA reason to consider approving the VA home loan. That additional income may make or break a loan application when the "baseline income" from your military pay alone doesn't bring the debt-to-income ratio low enough.
Between your military income, spouse's income, and any additional revenue you might have from a home business, eBay or other activities you may have enough to cover your expenses--but unfortunately the Department of Veterans Affairs doesn't automatically accept any additional cash flow. Additional income only counts when it meets VA “verified income." criteria. A client may have a thriving business on eBay, but unless that income is seen as stable and reliable (in the VA’s own words) it doesn't fit the requirements.
Some home buyers include any money a spouse might contribute as an additional source of income, but spouse contributions do not qualify automatically. A spouse’s income may count if the spouse is considered liable for some portion of the obligation on the home loan. Some states are considered “community property states” where the spouse may be automatically liable for a portion of the VA home loan; in those cases the income is verified and counted where applicable.
Child support, alimony and other maintenance payments are not required to be divulged as part of the income verification process, but such payments can only be included when they are able to be verified. In most cases you'll need a court order or other official documents showing the payments are required. Child support and alimony can’t be counted as income as part of informal agreements or a "verbal contract". Documentation is the key to getting this kind of income counted by the VA.
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