Everything to know about a statement of service for a VA loan

If you’re planning to apply for a Veterans Affairs loan to buy a home, one of the most important documents you’ll need is a statement of service. This letter gives your lender a clear picture of your military status and income. Delays in getting a statement of service can set back your VA loan application. Fortunately, once you understand why it’s needed and what it includes, it’s usually a straightforward process to obtain one.

What is a statement of service?

A statement of service confirms your military service, and includes your rank and pay. It’s usually a letter from your commanding officer, ideally written on official letterhead. Think of it as a snapshot of your military career.

The statement of service needs to include specific information for your lender. It’s a good idea to gather as much of this information yourself and provide it to your commanding officer so they don't have to research it themselves.

Here’s what your statement of service should include, at a minimum:

• Your full name and Social Security number
• Your date of birth
• The branch of the military you served in
• Your rank and pay grade
• Dates of active-duty service
• Any lost time, such as an unauthorized absence
• Type of discharge, if applicable
• Eligibility to return to service, if applicable
• The name, title, and signature of your commanding officer

A statement of service also helps your lender obtain your certificate of eligibility, which is a VA document verifying you are eligible for benefits.

Why do you need a statement of service?

When you apply for a VA loan, lenders want to know that you are eligible for a VA loan and that you can repay the loan. The statement of service helps them establish both because it includes your service type, duration of service, and your pay.

Generally, you’ll need to have 90 days of consecutive service during wartime or 180 days of consecutive service during peacetime to qualify for a VA loan. If you’re with the National Guard or Reserves, you’ll need six years of service.

As for income, requirements vary slightly depending on the amount of your loan, your debt-to-income ratio, and other factors.

Also, if you receive any pay in addition to your base pay, such as hazard pay, bonuses, or housing allowances, be sure to include that in your statement of service or make the lender aware of it. You’ll need documentation for this.

Why income verification matters

As mentioned above, lenders need to be confident that you can repay your loan. In addition to checking your credit score and history, your service record, and other indications of responsible behavior, lenders will verify your income.

Getting your statement of service early in the process helps lenders begin to estimate how much money you can comfortably borrow to buy a home. This in turn helps you determine how much you can afford to spend on a home.

How to get a statement of service

Unfortunately, there is no form to fill out to get a statement of service letter. You will need to ask your commanding officer to write one.

Since your commanding officer likely is a busy person, you can expedite the process by collecting all the information your lender needs ahead of time. You also can create a template for your commanding officer to review and sign. If you can, get on this early to give your commanding officer time to complete it.

It also might be a good idea to ask your lender exactly what they need in the letter, in case there are additional requirements.

VA statement of service vs. certificate of eligibility

When speaking of VA loan-specific documents you’ll need, it’s easy to confuse the statement of service with the certificate of eligibility.

A statement of service verifies the dates of your active duty, your pay, and other details of your military service. This document helps kick off your loan application and gives your lender details they need to start assessing your ability to repay a VA loan. You’ll get this letter from your commanding officer.

Your certificate of eligibility is a document issued by the VA that verifies that you are eligible for VA benefits, including a VA loan. It contains two crucial pieces of information: your VA loan entitlement code and your VA funding fee. You can get a VA certificate of eligibility online or by mail using VA Form 26-1880. You also can ask your lender to get it for you.

The certificate of eligibility’s entitlement code tells you how much the VA will guarantee for your loan. This is a complicated calculation. Your lender will need this to move forward with your VA loan application.

The VA funding fee is charged borrowers to help fund the program. It’s a fee you may need to pay at closing. It’s a one-time fee, which the certificate of eligibility will state. If you have a service-related disability or purple heart, this fee may be waived.

Here’s a quick overview of the difference between the statement of service and certificate of eligibility:

Other documents you’ll need to apply

The statement of service and certificate of eligibility are just two of the documents you’ll need to get a VA loan. Lenders will need your full financial picture, so be prepared to pull together various official documents.

Here’s a list of the typical documentation needed, in addition to the statement of service and certificate of eligibility:

• A government-issued ID, such as a driver's license
• Past two years of W-2 statements
• Past two years of tax returns
• Recent bank statements from checking, savings and retirement accounts
• Most recent pay stubs
• VA disability awards letter, if applicable
• Social Security awards letter, if applicable

Keep in mind, every person’s situation is unique, so there might be additional documents needed.

What happens if you don’t qualify for a VA loan?

While VA loans are designed to have flexible and friendly qualification criteria, that doesn’t mean they are guaranteed – even with a statement of service.

Common reasons VA loan applications are denied include application errors, a high DTI ratio, and property qualification issues. While the VA has no minimum credit score requirement, lenders may set their own minimum, with 620 a common figure.

If these issues hold up your application or result in a denial, don’t worry. There are ways to improve your chances for another application. While it might take some time, you can raise your credit score. You also can pay down debts such as credit cards, limit new credit applications, dispute or correct inaccurate information on your credit report.

VA loans also have specific requirements for properties, which must be safe and structurally sound, with functioning plumbing and electrical systems. You can buy a fixer-upper with a VA loan, but it requires a special application.

If you don’t qualify the first time, ask a lender, such as Rocket^®, to suggest ways you can improve your finances. It might be easier than you think.

The bottom line: A statement of service is a must-have for VA loans

If you are trying to buy a home using a VA loan, a statement of service is one of the first and most important documents you’ll need. And since your commanding officer is probably busy, it’s a good idea to ask for a statement of service as soon as possible. Once you start that ball rolling, begin gathering the financial documents your lender will require.

It’s always a good idea to get preapproved for a mortgage before you look at homes, so start with your commanding officer first and then gather the necessary documents. That way, when you’re ready to look at homes, the process goes smoothly.