l. Income from Service in the Reserves or National Guard

Income derived from service in the Reserves or National Guard may be included in effective income if the length of the applicant’s total active and Reserve/Guard service indicates a strong probability that the Reserve/Guard income will continue. 

Otherwise, this income may be used to offset obligations of 10 to 24 months duration.

m. Recently Activated Reservists or Guard

Lenders must ask every applicant, whose income is being used to qualify for a loan, if their income is subject to change due to participation in a reserves/ national guard unit due to activation. 

To accomplish this, lenders must obtain a statement, which affirms that a veteran-applicant’s status relative to membership in the Reserves or National Guard, has been ascertained and considered.  The statement should be made part of the origination package and should be submitted to VA in the event the loan is selected for full review. 

When the answer is yes, lenders must determine what the applicant’s income may be if activated: 

·   Reduced, carefully evaluate the impact the reduction may have on the borrower’s ability to repay the loan. 

·   Increased, consider the likelihood the income will continue beyond a 12 month period.