Lucas Found Out One Line in a VA Manual Was the Only Reason His Mortgage Didn't Fall Apart
Lucas found out one line in a VA manual was the only reason his mortgage didn't fall apart, and his loan officer almost never looked it up.
Lucas is a fictional but common example: a National Guard member near NAVSUPPFAC Beaufort, South Carolina, applying for a VA home loan. His drill pay looked irregular on paper, month to month it moved around, and the file review nearly wrote it off as too inconsistent to count toward qualifying income. A situation like this comes up often for Guard and Reserve applicants, and it usually has nothing to do with whether the income is real. It has to do with whether the lender checked the right section of the guideline.
What Most People Get Wrong
The assumption is that drill pay has to look steady like a biweekly paycheck to count. It doesn't have to look that way. What matters is whether there's enough service history to show the income has a good probability of continuing. That's a different question than whether last month's check matches this month's check.
The Actual Rule
Here is the VA guideline, word for word:
"Income derived from service in the Reserves or National Guard may be used if the borrower has served in such capacity for a period of time sufficient to indicate a good probability that such income will continue beyond 12 months. The total period of active-duty and reserve service may be helpful in this regard. Otherwise, this income may be used to offset obligations of 6 to 24 months duration. Lenders must consider if a borrower whose income is being used to qualify for a loan may have a change in income due to participation in a Reserves/National Guard unit subject to activation."
The key phrase is total period of active-duty and reserve service. That's not limited to how long someone has been drilling in their current unit. It includes prior active duty and reserve time. When a lender only glances at recent pay stubs, they miss the history that actually supports continuance.
Where the Breakdown Happens
Some lenders layer their own overlays on top of VA guidelines. An overlay might reject any income that varies month to month, without ever pulling the guideline section that addresses exactly this scenario. That overlay isn't VA policy. It's a shortcut, and it can cost a qualified borrower their approval.
What I Do Differently
When I work a VA file for a Guard or Reserve borrower, I pull Chapter 4, Topic 2, Subsection l on Reserve and National Guard Income directly, verify the borrower's total period of service, and get continuance confirmed in writing before anyone treats the income as unusable. That documentation is often the difference between a denial and a clean approval.
The One Thing You Can Do Today
If you're Guard or Reserve and applying for a VA loan and your drill pay gets questioned, ask your lender directly to review Chapter 4, Topic 2, Subsection l of the VA guideline on Reserve and National Guard Income and confirm your total period of service for continuance in writing. That single request puts the right section in front of the right person.
I'm Jason Sharon, licensed mortgage broker at Home Loans Inc. I find the path. If you're Guard or Reserve working through a VA loan, call 843-LOW-RATE and let's look at your income the right way.
Home Loans Inc - Jason Sharon, Mortgage Broker. Company NMLS #1728740, Jason Sharon NMLS #1281448. Equal Housing Opportunity.