At a glance
- Income documents
- Employer-completed form
- For
- Wage earners
- Tax returns
- Often not used
- Varies by lender and program
Educational overview, not a loan offer. Requirements vary by lender and borrower.
Overview
A written verification of employment (WVOE) loan documents income using a standard form completed by your employer, confirming your position, start date and earnings.
It can help borrowers with variable pay, recent raises or documents that are hard to gather.
How a WVOE loan works
A written verification of employment is a form your employer completes for the lender, listing your job title, start date, pay rate and recent earnings, often broken out into base pay, overtime, bonus and commission. Fannie Mae's version is the Request for Verification of Employment, Form 1005. In a WVOE loan, that form becomes the main income document, and at many lenders it takes the place of pay stubs, W-2s and tax returns.
The approach fits the federal ability-to-repay rule, which lists records from your employer, or from a third party that obtained the information from your employer, among the ways a lender may verify income. Most of the work happens between the lender and your employer: you sign an authorization, the lender requests the form, and the completed version comes back directly from HR, payroll or an employment verification service the employer uses.
See also
Who a WVOE loan can fit
WVOE programs are for wage earners, not business owners. If you own a quarter or more of the company that employs you, Fannie Mae treats you as self-employed, and WVOE programs are generally not designed for owners. Bank statement or profit and loss programs are built for that situation.
Borrowers who sometimes compare a WVOE loan include:
- An employee whose pay changed recently, such as after a promotion, so this year's earnings differ from last year's W-2.
- A salaried professional with significant bonus or commission income that the employer can document directly.
- A wage earner whose file falls outside agency rules for another reason, such as a non-warrantable condo or a higher debt-to-income ratio, and who wants a simple income package.
- A borrower who has trouble gathering older W-2s or pay stubs, but whose employer will complete the form.
Eligibility for wage earners using an employer form
Each lender sets its own WVOE rules, and they differ noticeably. Some lenders restrict WVOE loans to homes you will live in, while others allow second homes and rentals, so occupancy is one of the first things to confirm.
Typical requirements:
- A steady work history, often about two years in the same line of work and some minimum time with your current employer.
- A form completed in full and signed by HR, payroll or a company officer, received directly from the employer.
- Independent confirmation that the employer is a real, operating business, such as a state business registry or licensing record.
- No employment by a relative or by a party to the home sale, at many lenders.
- Credit, reserve and housing-history requirements set for the program, sometimes with lower borrowing limits for first-time buyers.
How income is verified and calculated
The employer's form reports base pay and, where it applies, overtime, bonuses, commissions or tips for the current and prior years. Lenders generally use your current base pay as reported and average variable pay over a history, often two years, so a single strong year does not overstate income. Some programs count only base wages or salary and leave variable pay out.
Fannie Mae's form includes optional fields where the employer can comment on the likelihood of continued employment, whether overtime or bonus is likely to continue, and recent or upcoming raises. Lenders may rely on those answers when deciding which income to count. Shortly before closing, expect the lender to confirm again that you still work there, by phone, in writing or through a verification service.
Documents you will usually provide:
- A signed authorization allowing the lender to contact your employer
- The completed form, returned directly by the employer or its verification service
- Bank statements for closing funds and, at some lenders, to show pay deposits
- Identification and any other income documents the program requires
Debt-to-income on a WVOE loan
The lender compares your monthly debts, including the proposed housing payment, with the monthly income it calculates from the form. For a home you live in or a second home, Regulation Z requires lenders to consider this debt-to-income ratio or your residual income without fixing a maximum, so each WVOE program sets its own ceiling.
Variable pay is where the ratio most often shifts. If the lender averages bonus or commission over a longer period, or excludes it, your qualifying income may be lower than your recent paychecks suggest. Ask your loan officer to show the ratio with and without variable pay so you understand which figure the program uses before you shop for homes.
Property types for WVOE loans
Where WVOE documentation is offered, the eligible home types generally mirror the lender's other Non-QM programs: detached homes, townhomes, condos and two- to four-unit buildings, with separate rules for condos outside agency standards and for rural property.
Occupancy limits vary from lender to lender. Some programs allow WVOE only on a primary residence; others also allow second homes and rentals. When the home is your residence or a second home you use, the loan is consumer credit under the ability-to-repay rule. A rental financed for business purposes is outside that rule and may carry different terms.
See also
Why wage earners consider a WVOE loan
A WVOE file can be one of the simplest Non-QM income packages for an employee, because the person who pays you supplies the figures.
- The employer, not you, provides the income figures, which lenders treat as independent evidence.
- Recent raises or promotions can show up right away, without waiting for a new W-2.
- At many lenders there are fewer documents to gather than in a full-documentation file.
- It can pair with other Non-QM flexibility, such as condo projects agency programs will not accept.
- Many lenders offer it for purchase and refinance.
Employer cooperation, cost and other WVOE tradeoffs
Your employer has to cooperate. Some HR departments complete only basic verifications or route all requests to an outside service that may not report every field the lender needs. A form with missing fields, corrections or a signature from someone without authority can delay the file.
WVOE loans also usually cost more than conventional loans and may come with tighter limits on equity, occupancy or loan size. Because the program rests on one document, lenders take extra steps to confirm the employer exists and that the form really came from it, and any doubt can lead to requests for pay stubs or other records you were hoping to avoid.
Talk it through with Ruben
WVOE loans compared with similar options
Conventional loans already accept Fannie Mae's employer form in place of pay stubs and W-2s, so a WVOE program matters most when something else in the file falls outside agency rules. The table compares features only.
If your income is straightforward and the rest of your file fits agency rules, compare a conventional loan first. If the issue is elsewhere, such as the property or the ratio, a WVOE or expanded prime program may be worth pricing side by side, and your loan officer can run both.
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| Feature | Written VOE | Conventional | Expanded prime |
|---|---|---|---|
| Main income record | Employer-completed form | Pay stubs and W-2s, or the employer form | Pay stubs, W-2s or tax returns |
| Tax returns | Often not used | Depends on income type | Often used |
| Variable pay | Averaged or excluded, by lender | Averaged under agency rules | Lender's rules |
| Rules set by | Each lender | Fannie Mae or Freddie Mac | Each lender |
| Occupancy | Varies; some primary only | Primary, second home or rental | Varies by lender |
| Typical fit | Employees with simple wage income | Files that meet agency rules | Near-miss fully documented files |
Compare with
WVOE scenarios: a promotion, a bonus, a family business, a condo
Examples only; they are not approvals or offers, and each lender applies its own guide.
- A hospital pharmacist was promoted this spring. Her employer's form shows the new salary, and the lender uses the current base pay.
- A sales manager earns a large annual bonus. One lender averages the bonus over two years from the form; another counts only base salary, which changes how much he can borrow.
- A machinist works for his uncle's company. Because some WVOE programs exclude employment by a relative, the loan officer looks at full-documentation options with the extra checks agency rules require.
- An employee is buying a condo in a building that fails agency project review, so she uses a WVOE program whose lender accepts the project.
Who completes the form and when the lender follows up
The pace of a WVOE loan depends heavily on how quickly your employer responds and whether the form needs corrections. Letting HR know in advance that a request is coming can help. A typical sequence:
- Your loan officer confirms the program, how your pay will be counted and who at your company handles verifications.
- You sign an authorization, and the lender sends the request to your employer or its verification service.
- Your employer returns the completed, signed form directly to the lender.
- The lender checks that the business exists and reviews the form for completeness.
- Near closing, the lender reconfirms your employment.
WVOE myths about filling in the form and skipping review
Files tend to stall when the employer is slow or unwilling to complete the form, when work history has gaps, or when the employer cannot be independently verified. Myths worth clearing up:
- Myth: I can fill in the form and have my boss sign it. Reality: Lenders want it sent to and returned by the employer directly, completed by HR, payroll or an officer.
- Myth: A WVOE loan skips the income review. Reality: The lender still analyzes the figures and must decide that you can repay.
- Myth: All my overtime and bonus will count. Reality: Many programs average variable pay or leave it out.
- Myth: Conventional loans cannot use this form. Reality: Fannie Mae accepts its Form 1005 for documenting employment and income.
- Myth: Any employer will do. Reality: Some programs exclude employment by a relative or by someone involved in the sale.
Common questions
13 questions
Who fills out the written verification of employment form?
Your employer's HR or payroll department completes and signs it, and the lender verifies it directly.
Can a conventional loan use a written verification of employment?
Yes. Fannie Mae lets lenders document a wage earner's income with its Request for Verification of Employment (Form 1005), completed by the employer, in place of paystubs and W-2s. If the rest of your file fits agency rules, a conventional loan may be worth comparing; WVOE-only Non-QM programs follow each lender's own guidelines, which can help when other parts of the file do not.
Can I use a WVOE loan if I work for a family member's business?
It depends on the lender. Even conventional rules add extra checks when a relative employs you, including tax returns to confirm you are not a significant owner, and they treat you as self-employed if you own enough of the business. WVOE-only programs set their own rules, and part-owners are usually pointed to self-employed options such as bank statement or P&L loans.
How long do I need to have worked for my employer?
Many WVOE programs look for a two-year history with the same employer, and some consider a shorter history case by case. Your loan officer can check how your work history fits.
Will I need to provide bank statements along with the employer form?
Some lenders accept the employer form on its own, while others also ask for about two months of recent bank statements. Either way, you will still document the funds you need for closing and any required reserves.
Does overtime, bonus or commission count on a WVOE loan?
It depends on the program. Some count only base wages or salary. Others include variable pay when the employer reports it for the current and prior years, typically averaging it over a history so that one unusually strong year does not carry the file. Fannie Mae's form also lets the employer say whether overtime or bonus is likely to continue, and lenders may weigh that answer. Ask how your particular mix of pay will be treated.
What if my employer uses a verification service instead of filling out forms?
Many larger employers send verification requests to a third-party service. Federal ability-to-repay rules allow records from a third party that obtained the information from your employer, and Fannie Mae also accepts verifications from such vendors. Some WVOE programs accept the service's report in place of the form if it has the detail they need, while others still want a signed form. Your loan officer can check whether your employer's method fits the program.
Can I give the completed form to the lender myself?
Generally no. Lenders want the form to travel from them to your employer and come back directly, so they can be confident it was not altered. Some guides require proof of how it was received, such as an email from a company address or mail from the employer's address. Fannie Mae's guidance has the borrower sign an authorization so the lender can obtain the verification directly from the employer.
Will the lender contact my employer again before closing?
Expect it. Lenders confirm, as late in the process as practical, that you are still employed as stated on your application. The check may be a phone call, an email or a verification service report. Fannie Mae requires a verbal verification of employment close to the note date on its loans, and Non-QM lenders can require the same. Tell your loan officer right away about any job change during the process.
I just got a raise. Can the lender use my new pay?
Often, if your employer reports the new rate on the form, because WVOE programs generally use current base pay. Under Fannie Mae's rules, even a raise that takes effect shortly after closing can count in some cases when the employer documents it, for example on Form 1005, but that option does not apply when a relative or an interested party employs you. Your loan officer can check how the program treats a recent or upcoming increase.
Can a WVOE loan be used on a home I will not live in?
Some lenders allow it and some do not. Certain programs limit WVOE documentation to a primary residence, while others offer it for second homes and investment property, sometimes with lower borrowing limits. A rental financed for business purposes is not covered by the ability-to-repay rule, so it may come with different terms, such as a prepayment penalty. Your loan officer can match the program to how you will use the property.
Can a WVOE loan be combined with other income?
Often. Many WVOE programs let you add income that does not depend on tax returns, such as Social Security, a pension or documented rental income, each verified under the program's rules. Self-employment income usually needs its own documentation path, which can change the program that fits. If a co-borrower is self-employed, the lender may document that person's income differently from yours.
What if my employer is a small company?
Small employers can complete the form, but lenders look harder at whether the business is real and whether the person signing has authority. Expect the lender to check a state business registry, a license or a website, and to confirm the signer's role. If you are related to the owner, or own part of the company yourself, the program may not accept the form, and self-employed or full-documentation options may be compared instead.
This page explains how this type of loan generally works. Programs, guidelines and availability vary by lender and change often. Contact Ruben to see which options are available for your scenario today.