First off, thank you for your service to our country. When you apply for a mortgage -- regardless of the loan program -- lenders attempt to confirm that your employment and income are steady and permanent. In short, the lender wants to make sure that you can continue to make your mortgage payment and pay back your loan over time.
If your military service or employment contract is expected to end within a year of your mortgage closing, this makes your job situation and income less certain which in turn makes it more challenging to qualify for the loan. In fact, the VA applies specific guidelines for applicants who are within twelve months of their release date or the end of their employment contract with the military or National Guard.
According to VA Program eligibility guidelines, applicants in this position may be required to take extra steps and provide additional documentation but still may be approved for a VA loan if they meet one of the following four requirements:
Provide documentation that the servicemember has already re-enlisted or extended her or his period of active duty to a date beyond the 12-month period following the projected closing of the mortgage
Provide verification of a valid offer of local civilian employment following the release from active duty
Provide a statement from the servicemember that he or she intends to reenlist or extend his or her period of active duty to a date beyond the 12 month period, plus a statement from the servicemember’s commanding officer confirming that:
the servicemember is eligible to reenlist or extend his/her active duty as indicated, and
the commanding officer has no reason to believe that such reenlistment or extension of active duty will not be granted
Documentation of other unusually strong positive factors, such as:
a downpayment of at least 10 percent
significant cash reserves
clear evidence of strong ties to the community coupled with a nonmilitary spouse’s income so high that only minimal income from the active duty servicemember is needed to qualify
If you meet one of the criteria outlined above, you should be able to qualify for a VA mortgage even if you are within twelve months of your release date or the end of your contract. For example, a written statement that you intend to extend your active duty for at least a year after your expected mortgage closing date combined with a supporting statement from your commanding officer may be sufficient to get approved for the loan.
Please note that qualifying for a VA loan with an exception like this requires additional effort by both the applicant and the lender. Not all lenders are willing or able to put in the extra work so it is important to find a lender that has experience working with similar applicants.
The table below shows leading VA lenders near you. We advise you to contact multiple lenders as qualification requirements vary. When you contact lenders be sure to ask about the specific VA employment guidelines that apply to you.
VA Lender Handbook: https://www.benefits.va.gov/WARMS/docs/admin26/m26-07/Ch4_Underwriting_NEW.pdf