Home Purchase Most Popular Articles

VA Loan Resources

  • Girl with space shuttle toy
    Data Suggests VA Loan Qualifying isn’t Rocket Science
    Veterans First Mortgage ®
    When it comes to getting approved, VA-eligible borrowers may currently have a slight edge.
  • Home Loans
    VA Loan Guide
    The VA program is one of the few remaining no-down payment programs in the market. Learn all about using your VA loan benefit.
  • Serviceman and son
    Understanding VA Home Loan Requirements
    Navy Federal Credit Union
    If you’re looking to buy, refinance or remodel your home, then be sure to review VA home loan requirements to see if you qualify.
  • VA home loan. Getty Images
    VA Home Loan: Do You Have What it Takes?
    There are five categories for eligibility. Your eligibility is based on you military service. Do you meet the criteria?
  • Family playing in yard
    5 Reasons to Live Off Base
    There are a lot of factors that play into your decision on whether to live inside or outside the base gates, and there's no bla...
  • Printout of a credit report
    Starting the Loan Application Process
    Once you've determined that you are eligible for a VA home loan, you can begin the loan application process, which includes six...
  • US Map Showing High Cost Counties
    VA Loan Limits for High-Cost Counties: Updated for 2017
    The VA loan limit for 2017 is $424,100. But it could actually be substantially more if you buy a home in a high-cost county. Se...
  • Couple looking at tablet
    How to PCS in a Hurry
    In a perfect world, military families get orders to their new locations months before the report date. In reality, things are h...
  • Family outside suburban house.
    VA Financing & Mortgages Options
    The VA guarantees a variety of home loans. There are two basic types of loans with two additional options that are appealing to...
  • gray home
    What Is a VA Guaranteed Home Loan?
    If you want to purchase or refinance a home, condominium or manufactured home, the VA can guarantee up to $417,000 of the total...
  • Home buying. Getty Images
    Top 3 VA Home Loan Tips
    We've scoured the Internet to find the three most helpful tips to help you take advantage of this exclusive benefit.
  • Business writing
    VA Loan Forms
    In order to receive your Certificate of Eligibility for VA loan benefits, you will need to submit your request for a Certificat...
  • big gray house
    6 Unbeatable Benefits of VA Loans
    Veterans United Home Loans|
    Here's a look at six of the biggest, most unbeatable benefits of the VA home loan.

Using Part Time or Overtime Income for a VA Loan

home and blue skies

To a VA lender, income is income. That sounds a bit silly at first but whatever amount of money brought in by a VA borrower, that income may be used to help qualify for a VA loan. But the key word there is "may" and while part time and overtime income is as good as any other income when it applies to paying for goods and services, there are times when part time or overtime can't be used to help a veteran buy and finance a home with a VA loan, even though the lender knows the income is there.

Either type of income may be viewed differently by the lender compared to how the borrower sees it and sometimes it doesn't make much sense when it's obvious that the income is coming in but it's useless when trying to qualify for a VA loan.

Overtime Described

Employees who get paid by the hour and get paid on a regular basis have a paycheck stub that lists how many hours were worked and the pay per hour for that job. Say that a veteran works as an electrician and is paid $25.00 per hour. If in a two week period the veteran works 40 hours and gets paid every other week, his gross paycheck will read $25.00 X 80 = $2,000. If the hours are consistent, and the VA lender will verify this by reviewing paycheck stubs covering at least a 30 day period, the gross monthly income used for qualifying is $2,000 X 26 (weeks) divided by 12 = $4,333.

But hourly workers don't always work a full 40 hours. Sometimes they work less, sometimes they work more. A paycheck stub for two weeks might read $25.00 X 77 = $1,925. The next paycheck could read $25.00 X 74 = $1,850. These changes in hours worked might be a bit confusing when determining gross monthly income but if the hours are relatively consistent the lender will simply average the year to date income and use that amount for qualifying.

Overtime earnings will also be reported on the paycheck stub and can then read something like:

$25.00 X 40 hours = $2,000

$37.50 X 15 hours = $562.50

Total This Period   = $2,562.50

So does the lender use this additional income to help qualify? Maybe. As long as the income meets a specific guideline—consistency.

Overtime earnings must be common and appear at least monthly in a similar amount. Lenders must not only document that overtime income has been consistent but that it will also continue in the future. There's certainly no crystal ball here but if there's a two year history of overtime earnings and it's consistent, then the lender could reasonably determine it will continue.

When lenders calculate a two year history, first the full time yearly amount will be figured using 40 hours X 52 weeks divided by 12 (months). Anything over that amount will be assumed to be overtime earnings. If there is ever a question, the VA lender can contact the employer for an explanation regarding how and when the employee is paid.

Part Time Dollars

Okay, say a couple decides they want to buy their first home in six months and finance it with a VA loan. They determine that they might need just a little bit more income in order to increase their chances of an approval, so the husband decides to take out a second, part time job to boost household earnings.

However, this approach may not work using the same scrutiny used reviewing overtime earnings. There must be a two year history of part time work as well as a likelihood of continuing in the future. Someone that just picks up a part time job for a few months will be in for a surprise when trying to use that income for a VA loan.

If the borrower can show W2 forms from working part time over the past two years, the income is consistent and can provide recent paycheck stubs from the part time effort, the income can be counted and will help someone qualify for a VA loan.

Grant Moon is founder and President of VA Loan Captain Inc., which assists veterans with VA loans, and author of a soon-to-be-released guide on VA loans.

Related Topics

VA Loan Home Purchase

Military News App by Military.com

Download the new Military.com News App for Android on Google Play or for Apple devices on iTunes!

Featured VA Loan Articles