Understanding the VA Loan Statement of Service Letter
Service members, military Veterans, and qualified surviving spouses have the benefit of the Veterans Administration home loan. VA home loans offer up to 100% financing, flexible guidelines, affordable payments, and can be used multiple times. One of the most popular process-related VA questions we receive from active service members involves the VA statement of service letter. Examples of some questions include:
- Why do you need a statement of service? You have my LES.
- Who completes the statement of service?
- What information is included in the letter?
What is the Purpose of a Statement of Service?
Mortgage lenders must verify employment income using a verification of employment (VOE) form. The employer completes the VOE. It provides the date started, position, income breakdown, the probability of continued employment, and more, but lenders do not use the standard VOE for military borrower verification. For military borrowers, there are two employment verification options. First, there is the “Status Report Pursuant to Service Members Civil Relief Act.” Our VA processors obtain this report which saves the borrower any work. Although, it is not always available or does not verify all necessary areas. Secondly, there is the Statement of Service.
When is a Statement of Service is required?
1. When the Certificate of Eligibility (COE) is not available online and is needed to request the COE from VA
2. When the borrower has less than 12 months on the ETS date to show:
- They are eligible to re-enlist
- There are no re-enlist restrictions for the borrower
3. Using “other pays” other than Base, BAH, BAS. Proof pay will continue 12+ months after closing
4. 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)
An LES will show the pay rate, rank, separation date, allotments, and more. Then, the W2’s and tax returns show the previous year’s income. The Statement of Service fills in the holes needed to fully verify the income verification. VA handbook chapter 2, 4.b, Veterans on active duty, require the statement of service form. This guideline states, “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.”
Who Completes the Statement of Service Letter?
Getting the VA statement of service letter could get a little tough sometimes because the C.O. is often busy. Get working on this early in the process to be safe. Besides the C.O., the personnel office, headquarters, or the adjutant may sign the letter as well.
What is Required in a Statement of Service Letter?
We know this required, but what in the world goes on the form? The following is typical for the verification letter:
- Letterhead
- Date
- Full Name of Borrower
- Social Security Number
- Date of Birth
- Branch of Service
- Rank
- 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
- Other pay amounts such as flight pay, parachute pay, special duty pay, etc.). Plus, the length of continuance.
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. Our VA mortgage team will do as much as possible to help our service members buy the home of their dreams. We will request the Certificate of Eligibility and status report, complete the application, discuss mortgage options, answer questions, and provide education to our military buyers.
