Employment verification: VOE and paystubs

Underwriting doesn't assume you have a job. They verify it. Three questions drive the employment review: Are you employed? For how long? How much do you make? Each question has specific documentation that answers it, and knowing which documents serve which purpose makes the intake process faster and reduces conditions. Collecting them through a single document collection workflow alongside the rest of the loan file keeps everything organized.

What VOE means

VOE stands for Verification of Employment. It's the formal process by which the lender confirms a borrower's employment status, job title, hire date, and sometimes income, directly with the employer.

There are two types:

Written VOE. A form sent to the employer (or HR department) asking them to confirm employment details and sign or stamp the response. This is the traditional method and produces a document that becomes part of the file.

Verbal VOE. A phone call from the lender or a third-party service to the employer's HR department, confirming that the borrower is still employed immediately before closing. The lender documents the call internally but doesn't produce a form for the borrower to upload. Most loans require a verbal VOE within a few days of closing, even if a written VOE was collected earlier.

Many lenders now also use automated employment verification services (like Work Number by Equifax) that pull employment and income data directly from payroll systems. When the employer participates in one of these services, the lender can verify employment without contacting anyone. The borrower doesn't need to do anything for this.

Paystub requirements

For W2 employees, the most recent paystub is the primary income document at application. Three things make a paystub usable:

Dated within the last 30 days. A paystub from 45 days ago may not be accepted, particularly at closing. If you're collecting documents early in the process, anticipate needing a new paystub closer to the closing date.

Shows year-to-date (YTD) earnings. The YTD figure is how underwriters calculate qualifying income. A paystub that only shows current period pay (without YTD) is less useful and may generate a condition.

All pages included. A paystub that's two pages needs both pages. If the employer issues a pay advice with supplemental pages showing deductions or benefit details, those pages may be required.

The most common paystub mistake: uploading a screenshot from an HR portal. Screenshots are frequently rejected for poor resolution or because they can't be verified as complete. Download the PDF from the employer's payroll portal (ADP, Paychex, Workday, etc.) rather than photographing or screenshotting it.

Employment letter requirements

An employment letter (also called a verification of employment letter) is a letter on company letterhead signed by an HR representative or manager confirming specific employment facts.

When is it required? Usually when an automated verification isn't available and a written VOE form hasn't been processed yet. Also commonly required for:

• Employees who are new to a job and don't have a full paystub yet
• Contract employees or those with variable schedules
• Borrowers returning from a leave of absence
• Situations where the paystub alone doesn't clearly establish current employment status

What the letter needs to include: the borrower's full name, job title, hire date, employment type (full-time, part-time, contract), and current employment status. If the letter also states income, it should match the paystubs.

A template to pass to HR:

"To Whom It May Concern: I am writing to verify the employment of [Borrower Full Name]. [He/She/They] has been employed full-time as a [Job Title] since [Hire Date]. [He/She/They] is currently employed and in good standing. If you have questions, please contact me at [HR contact information]. Signed, [HR Representative Name, Title, Date]."

Commission and bonus income

For borrowers whose pay includes commissions, bonuses, or overtime, the calculation is different. Variable income typically can't be qualified from a single paystub.

Most programs require two years of history to count commission or bonus income, using the average of the two most recent years (from W-2s and tax returns). The current year YTD also factors in: if year-to-date earnings are on pace with the two-year average, the income is stable. If YTD is running significantly lower, underwriting may reduce the qualifying income.

Documentation for commission and bonus income: two years of W-2s plus the current paystub. Some programs also require a signed statement from the employer confirming that the variable pay structure is ongoing.

Tip income is handled similarly. Reported tip income from the last two years (on tax returns) is the basis for qualifying.

Employment gaps

A gap in employment history is not automatically a problem. A brief gap (under 30 days) between jobs is generally not flagged. Longer gaps generate a condition asking for an explanation.

What the explanation needs to cover: the dates of the gap, the reason (medical leave, family care, voluntary departure, layoff), and confirmation that the borrower is now fully employed. Supporting documentation helps: an offer letter confirming the start date of the new job, or an employer letter confirming return from leave.

Gaps followed by a change in employment type (W2 to self-employed, or a different industry) may require more documentation, particularly if income is substantially different from what was earned before.

Self-employed vs W2: a quick comparison

Self-employed borrowers don't have paystubs or employer letters. Their income verification comes from tax returns, business returns, a YTD profit and loss statement, and sometimes a CPA letter confirming the nature and duration of the business.

The tradeoff: more documentation, but the income calculation is done from returns rather than from a pay stub. For a deeper look at how underwriting reviews self-employed income, see Self-Employed Income Documents: What Underwriters Actually Review.