VA Recently Released Clarification On Underwriting Guidelines For Unreimbursed Employee Expenses.
This is great news & should help more Veterans qualify for a VA Loan.
Current VA Loan underwriting standards require all Unreimbursed Business Expenses to be listed in Section D, Debts and Obligation, on VA Form 26-6393, Loan Analysis. In order to be consistent with industry standards for the treatment of Unreimbursed Business Expenses reported on IRS Form 2106, VA is clarifying its policy to more accurately reflect income derived from commissioned employees.
3. Clarified VA policy. The following policy will be effective for all VA Loan applications dated on, or after June 1, 2016:
a. For a borrower who qualified using commission income of less than 25% of the total annual employment income: (1) IRS Form 2106 expenses are not required to be deducted from income even if they are reported on IRS Form 2106 and are not required to be added as a monthly liability.
(2) Tax returns are not required to document the source of income and deductions.
b. For a borrower earning commission income that is 25% or more of annual employment income, IRS Form 2106 expenses must be deducted from gross commission income regardless of the length of time the borrower has filed the expenses with the IRS.
This is great news. Here’s what it means. Let’s say you made $70,000 but you had $15,000 in Unreimbursed Business Expenses. Before this a lender would have been required to reduce your $70,000 by the $15,000 Unreimbursed Business Expenses for qualifying purposes on a VA Loan.
If you have questions or you want to see how much you qualify for, feel free to call me at (877)228-9069 or fill out the form below.
