Part Time Income: Will VA Lenders Use It?
Having the ability to make the mortgage payments each and every month is probably the single most important qualifying requirement. VA lenders have long established guidelines that limit how much of a veteran’s monthly income should be allotted for debt obligations. The universal VA guideline is 41 percent of the borrower’s gross monthly income of all borrowers on the loan application. Sometimes when a potential borrower looking at a VA loan in the future might think of adding some extra income each month to either make the qualifying process easier or to be able to qualify for a larger VA loan. How does VA treat part time income?
For someone that has a standard, full time job, a lender will verify that income showing a two year history of full time work, two most recent W2 forms and pay check stubs covering 30 days. For self-employed borrowers, recent federal income tax returns are used to qualify the borrower. Part time work is considered any job where the employee works up to 29 hours per week.
Say a borrower wants to boost qualifying income so he goes to the mall and begins work as a cashier at a clothing store. The additional part time income does boost his earnings by another $1,000 per month, significantly increasing his pay. However, VA guidelines won’t allow that part time income to be used. Why is that?
VA lending rules require that there be at least a two year history of continuous part time employment and validated with W2 forms. Someone who just begins a new part time job to bolster income in order to qualify will be disappointed to learn the new funds can’t be used. However, if there is a two year history, VA lenders may indeed use that additional pay check.