UWM - INCOME

MILITARY LES INCOME:

For military borrowers using military income to qualify, the following guidelines apply:

  1. Required Documentation:

    • The lender must obtain a copy of the Borrower's military Leave and Earnings Statement (LES) [2].

    • The lender must verify the Expiration Term of Service (ETS) date on the LES [2].

  2. ETS Date within 12 Months:

    • If the ETS date is within the first 12 months of the loan, military income may only be considered effective income if the borrower represents their intent to continue military service [2].

    • Documentation to show re-enlistment will be required if the ETS or EAOS date is expiring within 12 months of the closing date [3][5][4].

  3. Examples:

    • If a member of the Reserves has been called to Active Duty and the ETS date on his LES indicates a date within the next 12 months, but his active duty orders indicate his active duty tour will not exceed the next 60 days, the active-duty income cannot be considered. Instead, his civilian employment and drill duty will need to be considered [1].

    • For an Active Duty Veteran whose ETS date is less than 1 month from the anticipated date of closing and who indicates he will be receiving military retirement and has accepted civilian employment, the lender must verify his future retirement income from the Department of Defense and verify future civilian employment with the Veteran's new employer [1].

ROCKET MORTGAGE - INCOME

MILITARY LES INCOME:

All Military Leave and Earning Statements will list base pay and any allowance the client may be earning.

  • Base pay: Is calculated the same as salary income and is determined by rank/grade and years of Service.

  • Temporary Allowances: Will rarely have three years of continuance and can not be considered eligible income.

  • Permanent Allowances: Can be assumed to have three years of continuance and stability based on the payment(s) being tied to housing, job duties, or dependent status.

  • If there is a military allotment reporting on the LES, the nature of the allotment must be investigated to determine whether it is related to a debt that needs to be included in the DTI.

    • If documentation shows the allotment to be a savings allotment, it does not need to be included in DTI and no further documentation is required.

Basic Allowance for Housing (BAH):

  • For clients who are being transferred to a new military installation, use the BAH Calculator to determine the client's new BAH amount.

  • The client who are paid semi-monthly, verify that the BAH income is half by using the BAH Calculator.

    • Once confirmed, double the BAH and basic pay income and add the income into the calculator.

  • BAH will only be determined by the client's home ZIP code if it is the same as their military installation.

Grossing up:

  • Non-taxable sources of income may be grossed up when calculating the client's DTI.

    • This is not applicable for residual income calculations.

If the Estimated Time of Separation date or end of contract term indicated on the client's Leave and Earnings statement is within 12 months of the close date, then one of the following items must be obtained to support the stability of income:

  • Coast Guard may have a contract end date rather than an ETS date. If this does not show on the pay stub, request proof of contract end date.

  • Signed military orders from the client's command showing re-enlistment or extension of active duty beyond the 12 month period following the projected close date.

  • Verification of a local civilian offer of employment following the release from active duty, including when the date of employment is set to begin and anticipated earnings.

  • Verification of military retirement income following release from active duty.

  • If the future start date is within 60 days of close, see the Future Employment Earnings - New Employment, Raises, and Promotions page for guidance.

    • If the future start date is greater than 60 days from close, use the lower of the two incomes.

  • A statement from the service member stating that they intend to re-enlist, extend the period of active duty to a date beyond the 12 month period, or, in the case of officers, will not resign their commission in the next 12 months.

    • For enlisted service members, this must be accompanied with a statement from the service member's commanding officer confirming the following:

      • The service member is eligible to re-enlist or extend the active duty service as indicated by the service member.

      • The commanding officer has no reason to believe that such re-enlistment or extension of active duty will not be granted.  

  • Officers of the Armed Service only:

    • Officers are not enlisted or bound by the date in the ETS block of the LES.

    • Officers have life time commissions and do not need to supply a letter of re-enlistment

      • Do not ask an officer to provide a letter of re-enlistment.

    • If an ETS date is listed it signifies the minimum service they are required to serve before they can submit their resignation.

      • If the date has already passed the ETS date may report as 00000, EEEEE, or 88888.

  • For U.S. Marine Corps, see the Marines website to determine the difference between enlisted and officer.

Verification:

  • Military personnel receiving an LES are exempt from the verbal Verification of Employment requirement.