VA Loans and Your New Job

Getting a VA loan when you’ve held the same job for a long time is one thing; borrowers or potential VA borrowers who want to buy or refinance but haven’t been in a new job very long may feel nervous about their chances at loan approval.

It is true that VA loans, like all other home loans, require the lender to verify a borrower’s job history, plus past and current income. Your lender will request credit reports from the three major credit reporting agencies, but he or she will also give the same attention to the details of your work and income history—your FICO scores and loan repayment history are part of the loan approval criteria, but they aren’t the only things the lender will scrutinize.

There are many careers that require frequent changes of employer in order to stay upwardly mobile. Some types of employment—the entertainment industry and other creative arts, startup business management, and more—requires the employee to change jobs often. Do these professionals get penalized because the nature of their employment dictates frequent job changes?

VA loan rules make provisions for this. According to the VA Lender’s Handbook, Chapter Four, in the section titled, “Recent History of Frequent Changes of Employment” you’ll find these instructions to the lender:

“Short-term employment in a present position combined with frequent changes of employment in the recent past requires special consideration to determine stability of income.  Analyze the reasons for the changes in employment…Give favorable consideration to changes for the purpose of career advancement in the same or related field.”

However, the VA Lender’s Handbook also says:

 “Favorable consideration may not be possible for changes:

•            with no apparent betterment to the applicant,
•            from one line of work to another.”

That is important to keep in mind. When applying for a VA loan, you may wish to include explanations for frequent job changes with your VA loan application. In some cases your lender may require such explanations later anyway. It’s always best to be prepared when going into a loan application when you know your job history or other factors might be less traditional than others.

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