VA home loans are such a great way for our military to affordably finance a new home. The benefits are many and our service members deserve it. We also feel that education and answering questions for Veterans and Service Members is key. Some of the most popular questions we receive on VA loans stem from the VA Statement of Service. Additionally it is one of the most misunderstood VA requirements. A popular question is “Why do you need a statement of service when you have my LES?”. Then another is “How does my C.O. complete the statement of service letter?”.
So let’s answer these questions and give an example to make things easier.
Besides the normal proof of income and asset statements, VA loans have 3 primary required forms. These are:
- Certificate of Eligibility
- DD214 – Veterans only
- Statement of Service – Active Duty Military or Reserves (Spoiler alert! There is an alternative!)
Foremost, the VA certificate of eligibility is required on all VA loans. It states how much entitlement is available to finance a VA home loan. So basically entitlement determines loan amount and down payment amount. The next step depends on a borrower’s military status. Discharged Veterans must provide a dd214 which breaks down the service dates, discharge status, and more. Lenders use this form to request the VA COE. But active duty or reservists may be required to provide the statement of service. Which is the topic of this article.
Why is a Statement of Service Letter Required?
Typically, mortgage lenders use a form called a verification of employment (VOE) to gather critical pieces of information. Well, for military borrowers, there are a couple of employment verification options. The first military verification option is a statement of service. Although we most often use a second option because it is easier on the service member. This report is called the “Status Report Pursuant to Service members Civil Relief Act“. The status report, if allowed and available, is easily obtained by our VA processors. In this case, our service members are saved the headache! Win Win!
A Statement of Service is Required When…
- Certificate of Eligibility is not available online & is needed to request the COE from VA
- Borrower has less than 12 months on the ETS date to show..
- borrower is eligible to re-enlist
- there is no reason the borrower will not be allowed to re-enlist
- Using “other pays” other than Base, BAH, BAS. Proof pay will continue 12+ months after closing.
- Using a reservist’s pay. Would show…
- how many drills borrower has participated in
- if active reservists training with units throughout the year
- if participating in annual active duty for training (usually 2 weeks and one weekend per month)
So, an LES will show the rate of pay, rank, separation date, allotments, and more. Then, W2’s and tax returns show previous years income. But you can see how these forms help lenders meet the required Veteran’s Administration guidelines. Basically, the SOS or Status Report, plus the LES provide key details to determine loan qualification. Furthermore these forms prevent fraud.
And just so you see lenders don’t just make this up, below we give the actual VA guideline.
The actual underwriting guideline from the VA Lender’s Handbook Chapter 2, 4.b: Veterans still on active duty:
Proof of service for Veterans on active duty is a statement of service signed by, or by the direction of, the adjutant, personnel office, or commander of the unit or higher headquarters they are attached to. There is no one unique form used by the military for a statement of service. While statements of service are typically on military letterhead, some may be computer generated.
How do I get my Statement of Service Letter?
Military life is busy! So finding some time with your Commanding Officer can be tough. This is why we try to use the status report when possible. But if the SOS is needed, get it early! As mentioned above, there are specific rules for who completes and signs the statement of service. Most often, the commanding officer completes the form. But the personnel office, headquarters, or the adjutant may sign it as well.
What is Required in a Statement of Service Letter?
So we know this required, but what in the world goes on the form? The following is typical for a Statement of Service
- Full Name of Borrower
- Social Security Number
- Date of Birth
- Branch of Service
- Date Entered on Active Duty
- Current Date of Separation
- Unit of Assignment & Current Duty Station
- Duration of Time Lost (if applicable)
- Last Discharge
- Whether Barred or Flagged from Continued Service
- If Reserves, Whether Borrower is Active or Inactive Status
- If Eligible to Re-enlist
- Information Current as of Date
- Signature and Title of Signer
- Amounts of other pay (flight pay, parachute pay, special duty pay, etc.) and how long they are expected to continue
If you are ready to buy a home, go ahead and request your statement of service letter. It will save you some time during the mortgage process
Secret to Fast VA Loan Approval Up-Front
- Signed and dated Statement of Service Letter (Ask us if we need it though)
- DD214 (if no longer in the military)
- Current LES
- Most recent W2 and Tax Return
- Most recent bank statement (all pages of actual monthly statement)
- Photo identification
- Military transfer orders – if transferring to a new base
We will request your COE, status report, complete your application, and discuss your mortgage options. Our goal is to have educated, confident, and approved buyers!
Author: Russell Smith
Team Move OVM Financial loan officer success is Russell’s primary focus. He provides the tools and techniques he used as a top producing loan officer. Additionally he offers the Team Move OVM Financial Agent Training Program. Sharing is so important to Russell so he works diligently to be a resource to loan originators and Realtors.