Posted on: September 28, 2017
by Ron Bennett, VA Loan Officer and 35-year U.S. Army Veteran.
Active duty military personnel receive various types pay above their regular pay during their military career such as allowances and special and incentive (S&I) pay. Your extra pay depends on what you do and where you serve.
It also depends on if you are single or married, or if you live on post or off post.
This additional pay could boost your borrowing power when you get ready to purchase a home and qualify for a mortgage. Some of the different types of incentive pay are:
There are several other types of military income which are commonly referred to as Special and Incentive (S&I) pay. This pay is for specific qualifications or events. Here are some examples:
In order to determine if you qualify to use BAS, BAH, or S&I pay towards your VA loan, the lender will have to first determine whether you will receive this pay for a foreseeable future.
Lenders will consider this pay usable as long as you are not within 12 months of separation from the military. Also, we have to be able to verify the income being used. This can be done by providing your Leave and Earning Statement (LES) which will show the how much you are receiving, and how long you are going to receive it.
If you are within 12 months of leaving the service, and you plan to use this income, you should:
For people who are in the Reserves and National Guard, it would be best to contact a lender, as these kinds of allowance will be calculated differently. However, as a general rule, you should be able to use average pay received over the previous two years, as long as it’s expected to continue.
Ron Bennett (NMLS 57792, MLO-57792) is a Sr. Mortgage Advisor in Washington State. Contact Ron at 253.561.9704 and visit him on Facebook. Ron’s military experience: last rank – Master/First Sergeant (E-8); 35 years of service; U.S. Army.