Fannie Mae Selling Guide, Chapter B3-3, Income Assessment

en · official · sha256:670b8eaa6d99c272386dcbb1f246223c2ba0cb18e449ec04dd918a00391baa8e

Borrowers must be qualified with income the lender can reasonably expect to continue for the foreseeable future. The lender must evaluate the likelihood of continuance based on the nature of the income and supporting documentation. If the income does not have a defined expiration date and the applicable history of receipt of the income is documented (per the specific income type), the lender may conclude that the income is likely to continue and the lender is not expected to obtain additional documentation, unless there is information to the contrary. If the income source does have a defined expiration date or is dependent on the depletion of an asset account or other limited benefit, the lender must document that the income is expected to continue for at least three years from the note date. Additionally, when an asset account is the sole or majority source of qualifying income, the lender must assess the borrower’s ability to continue repaying the loan once the income source expires or the asset is depleted prior to loan maturity. If the lender is notified that the borrower is transitioning to a lower pay structure, for example due to pending retirement or a new job, the lender must use the lower income amount in qualifying, and must determine that the lower amount is stable and predictable.

Ссылаются нормы: AdjustedAmountDisplacedByLowerPay, ComputedAmountDisplacedByLowerPay, DefinedExpirationDefeatsEligibility, DocumentedThreeYearsOverExpiration, ExpirationOverGeneralEligibility, LowerPayOverAdjustedGross, LowerPayOverComputedAmount, LowerPayStructureDisplacesAmount, ThreeYearContinuanceRestoresEligibility

en · official · sha256:7908b00ad07f15aef7326b4856e48d910fd53bc24600f8e7746b376c15209ec6

The lender should give special consideration to sources of income that may be nontaxable. The lender must verify that the particular source of income is nontaxable, using documentation such as award letters, policy agreements, account statements, tax returns or any other documents that address the nontaxable status of the income. Any exceptions to the required documentation can be found within the details of each specific income type. If the income is verified to be nontaxable, and the income and its tax-exempt status are likely to continue, the lender should develop an “adjusted gross income” for the borrower by adding an amount equivalent to 25% of the nontaxable income to the borrower’s income. If the actual amount of federal and state taxes that would generally be paid by a wage earner in a similar tax bracket is more than 25% of the borrower’s nontaxable income, the lender may use that amount to develop the adjusted gross income, which should be used in calculating the borrower’s qualifying ratio.

Ссылаются нормы: AdjustedGrossOverPlainAmount, NontaxableIncomeGrossUp, PlainAmountDisplacedByAdjustedGross, QualifyingMonthlyIncomeAdjustedForNontaxable

en · official · sha256:fddf1fb402b44cde70cd57c210602182a9a7239213edfc55cc679ae3c1dc77bf

Income from a non-occupant borrower may be considered in qualifying for both DU and manually underwritten loans provided the income meets the same standards as required for occupying borrowers. For information about restrictions to the down payment, DTI, maximum LTV, CLTV, and HCLTV that apply to loans with a non-occupant borrower, see

Ссылаются нормы: NonOccupantIncomeConsiderable

en · official · sha256:ff9c8500f96661225f5986497475bfe07f622274f8b128b9b66d347d58c6bf82

For certain high LTV refinance loans, the lender is not required to follow the income documentation requirements described in this Chapter. Additionally, DU offers a reduced level of income documentation for High LTV Refinance loans. See Chapter B5-7, High Loan-to-Value Refinance Option for specific requirements. DU Documentation Requirements DU indicates the minimum income verification documentation required to process a loan application. This level of documentation may not be adequate for every borrower and every situation. The lender must determine whether additional documentation is warranted. If the lender is unable to determine the stability of the borrower’s income on the basis of the available documentation, the income must be removed and the loan resubmitted to DU.

Ссылаются нормы: HighLtvRefinanceWaivesDocumentation, UndeterminableStabilityRemovesIncome

en · official · sha256:e1596bda216ff5c258316918c61b6d4132047b79e66749b2e1a47dc61d2cfb2e

A stable and predictable flow of income is a foundational element in loan underwriting. The lender must document income is stable, has a documented history of receipt, and is reasonably expected to continue.

Ссылаются нормы: IncomeEligibleWhenDocumented, QualifyingMonthlyIncome

en · official · sha256:9106d8a82370e8a98df42ca462a703748ed1ea1fb8f4bf58253271204adfa6cb

Any income paid to or earned by the borrower in the form of virtual currency, such as cryptocurrencies, is not eligible to be used to qualify for the loan.

Ссылаются нормы: VirtualCurrencyDefeatsEligibility, VirtualCurrencyIncomeIneligible, VirtualCurrencyOverEligibility

en · official · sha256:ddd16c69de80bd9b07d3ca5e7088efd6fb2a1cc7ec22b196574de2d0393e4e0d

IRS Form 4506-C can be used to obtain tax transcripts for up to four years or tax periods and is valid for 120 days after completion (including signature) by the borrower. The lender must have each borrower whose income is used in qualifying (regardless of income source) complete and sign a separate IRS Form 4506-C at or before closing. An alternative form or process (which may include IRS Form 8821) is also acceptable if it authorizes the release of comparable tax information from the IRS and the borrower has signed an authorization expressly permitting the lender to disclose such IRS-derived information to Fannie Mae. Note: When all of a borrower’s income is validated by the DU validation service, the lender is not required to obtain a signed IRS Form 4506–C for that borrower.

Ссылаются нормы: DuValidationExcusesForm4506c, Form4506cCurrentAtClosing, Form4506cValidThrough

en · official · sha256:985b07aa968730ab6c641de83eb4552a36699f031e0aca2b3683dcea84393f5f

The lender must retain all tax documents, including either the IRS Form 4506-C or the tax transcript(s) and any subsequent explanation or documentation of discrepancies in the loan file for QC review.

Ссылаются нормы: TaxDocumentRetentionSatisfied

en · official · sha256:330b3c4eaebbdfbeec1bc972d2ff98758c8714e0ff4e297bd6603d0da126f044

Each tax return must be signed by the borrower unless the lender has obtained one of the following signature alternatives: documentation confirming that the tax returns were filed electronically, a completed IRS Form 4506–C (signed by the borrower) for the year in question, or IRS transcripts that validate the tax return.

Ссылаются нормы: TaxReturnSignatureSatisfied/alt/1, TaxReturnSignatureSatisfied/alt/2, TaxReturnSignatureSatisfied/alt/3, TaxReturnSignatureSatisfied/alt/4

en · official · sha256:eda47a7a5dc0ba676b72095391c4da93a58ddc841a8ca3307a0c6f1cc5bc4ea6

In certain instances, tax transcripts may not provide sufficient detail to support the qualifying income. In those cases, the lender must obtain copies of the actual returns, schedules, or forms. For example, the lender must obtain copies of Schedules B through F, Schedule K-1, or business returns, unless: the income reflected on the applicable schedule transcripts is positive, and the income supported by that schedule or form is not being used for qualifying.

Ссылаются нормы: ActualReturnsExcused, ActualReturnsObtained

en · official · sha256:087711e20e7c65abcbb3b986182dfe281780c8757817d206209091a3130b7b81

Confirm that tax returns meet the allowable age of documents requirements in B1-1-03, Allowable Age of Credit Documents and Federal Income Tax ReturnsB1-1-03, Allowable Age of Credit Documents and Federal Income Tax Returns. Ensure all information submitted to Income Calculator is accurate, complete, and reflects the information on the tax returns being used to document the qualifying income. Investigate and resolve any contradictory or conflicting information that may impact the accuracy of the income calculation. Comply with all other Selling Guide requirements, including DU messages, when applicable, and requirements in

Ссылаются нормы: CalculatorAdditionalRequirementsMet

en · official · sha256:2a613b6b9dfe31dbd81955830b5793f337d5d1142b77ca9df258d8c17849f54d

The Income Calculator Findings Report can be used to satisfy the requirements for the lender to prepare a written analysis of their evaluation regarding the calculation of qualifying income, such as Fannie Mae's Cash Flow Analysis ( Form 1084), Comparative Income Analysis ( Form 1088) or a similar form. A copy of the Findings Report must be maintained in the loan file.

Ссылаются нормы: FindingsReportSatisfiesWrittenAnalysis

en · official · sha256:c928522793837774f81b42a4ae5113e1819cfd69f6ca30c4eebeaaa7468fbd03

When the amount of qualifying income being used by the lender is not more than the amount of income calculated by Income Calculator, enforcement relief from representations and warranties on the accuracy of the income calculation may be provided but the lender remains responsible for the accuracy of the information submitted. See Enforcement Relief of Representations and Warranties for Loans with Income Calculated by Income Calculator in

Ссылаются нормы: EnforcementReliefAvailable

en · official · sha256:e64cb3cf7e4d53d3f7de4c2fec6d436cc78a833e32e684a6db0bad61bd60d859

Alternative Methods to Verify Employment: The lender can obtain a written verification confirming the borrower’s current employment status within 10 business days prior to the note date. The written documentation must include the name and title of the person who completed the verification for the employer. The lender can obtain an email exchange with the borrower's employer from the employer's work email address within 10 business days prior to the note date. The lender must conduct additional due diligence to confirm that the email address for the employer is accurate. Examples of due diligence include, but are not limited to, searches of domain name on employer website (review for match to employer email address), employer directory on the internet, or other professional networking or business profile websites. The email exchange must include borrower's name and employer's name; name, title, and work email address of the individual contacted at the employer; date of contact; and borrower's current employment status. Within 15 business days prior to the note date, the borrower can provide either the most recent paystub as of that date that, meets the requirements in B3-3.2-01, Standards for Employment and Income DocumentationB3-3.2-01, Standards for Employment and Income Documentation; reflects information for the most recent expected pay period based on the date it is provided and the borrower's pay cadence; and does not include any information indicating the borrower may not be actively employed. Bank statements dated no earlier than 15 business days prior to the note date that meet the requirements in B3-4.2-01, Verification of Deposits and AssetsB3-4.2-01, Verification of Deposits and Assets, reflects information for the most recent expected pay period based on the date of the statement and the borrower's pay cadence, and does not include any information indicating the borrower may not be actively employed.

Ссылаются нормы: BankStatementAlternativeValidThrough, BorrowerDocumentCurrent, EmailVoeCurrent, EmailVoeValidThrough, PaystubAlternativeValidThrough, WrittenVoeCurrent, WrittenVoeValidThrough

en · official · sha256:e4ca96adaf85e385516df200f4ac5a80d72af4d0e88096953a0ad45e9582936d

The conversation must be documented. It should include the following: name and title of the person who confirmed the employment for the lender, name and title of the person who completed the verification for the employer, date of the call, and the source of the phone number.

en · official · sha256:1fd5c4a71969dd8223b73b23ecb7fef087e9ecc4a0548405a3c4b51742f47b5b

If the borrower is in the military, in lieu of a verbal or written VOE, the lender must obtain either a military Leave and Earnings Statement dated within 120 calendar days prior to the note date, or a verification of employment through the Defense Manpower Data Center. See

Ссылаются нормы: MilitaryVerificationByDmdc, MilitaryVerificationByStatement, MilitaryVerificationValidThrough, assert-11

en · official · sha256:d47eeb98474a7740a017bbfd2dd80670d878a216cbfb6139b0a42ea4d8d49847

The lender must independently obtain a phone number and, if possible, an address for the borrower's employer. This can be accomplished by using a telephone book, the Internet, directory assistance, or by contacting the applicable licensing bureau.

Ссылаются нормы: VerbalVoeProperlyConducted

en · official · sha256:818d0bab44ea4cca0efbc23ba08e410f0425e3d2394d0de87384ae989733e9db

verify the existence of the borrower's business within 120 calendar days prior to the note date from a third party, such as a CPA, regulatory agency, or the applicable licensing bureau, if possible; or by verifying a phone listing and address for the borrower's business using a telephone book, the internet, or directory assistance. document the source of the information obtained and the name and title of the lender's employee who obtained the information.

Ссылаются нормы: BusinessExistenceValidThrough, SelfEmploymentVerificationCurrent, assert-12

en · official · sha256:ce1b086201032df34c921659d0fcc78a72e8e1d1a8cc746a582692f65d582e56

Note: If the employer confirms the borrower is currently on temporary leave, the lender must consider the borrower “employed.” See

Ссылаются нормы: TemporaryLeaveIsEmployment

en · official · sha256:22e4d715aa8844e2f47db5ace156f7a2e7398d8a142f540d81b40c8a3a252bd9

If the borrower is a union member who works in an occupation that results in a series of short-term job assignments (such as a skilled construction worker, longshoreman, or stagehand), and the union facilitates the borrower’s placement in each assignment, the lender may obtain the verbal VOE from the union.

Ссылаются нормы: UnionVerbalVoePermitted

en · official · sha256:db0aead488739436769e94980774cb9ca8a626c9a33a07a5a8ce86361ec01c84

If the employer uses a third-party employment verification vendor, the lender must obtain written verification from the vendor of the borrower’s current employment status within the same time frame as the verbal VOE requirements. Note: Because third-party vendor databases are typically updated monthly, the verification must evidence that the information in the vendor's database was no more than 35 days old as of the note date.

Ссылаются нормы: VendorVerificationCurrent

en · official · sha256:0351d688ee8b3d4bddeba85920aa4c03c290128644fd8e98c1ff628c499c2d37

A verbal verification of employment (verbal VOE) must be obtained for each borrower using employment or self-employment income to qualify. The verbal VOE must be obtained within 10 business days prior to the note date for employment income, and within 120 calendar days prior to the note date for self-employment income. The verbal VOE requirement is intended to help the lender mitigate risk by confirming, as late in the process as possible, that the borrower remains employed as disclosed on the loan application. A change in the borrower’s employment status could have a significant impact on that borrower’s capacity to repay the mortgage loan and must be fully reevaluated. Alternatively, the lender may obtain the verbal VOE after closing, up to the time of loan delivery. If the verbal VOE (or allowable alternative) cannot be obtained prior to delivery, the loan is ineligible for sale to Fannie Mae.

Ссылаются нормы: EmploymentVerificationCurrent/alt/1, EmploymentVerificationCurrent/alt/2, EmploymentVerificationCurrent/alt/3, EmploymentVerificationCurrent/alt/4, EmploymentVerificationCurrent/alt/5, EmploymentVerificationCurrent/alt/6, EmploymentVerificationCurrent/alt/7, EmploymentVerifiedBeforeDelivery, VerbalVoeCurrent, VerbalVoeValidThrough

en · official · sha256:32cc74ce394477baf7f82989b92103615b8caa3da502d64f9f05aeacadd5804c

The lender may use the Request for Verification of Employment ( Form 1005) to document employment and income. The date of the completed form must comply with B1-1-03, Allowable Age of Credit Documents and Federal Income Tax ReturnsB1-1-03, Allowable Age of Credit Documents and Federal Income Tax Returns. The information on Form 1005 must be legible. The following fields on Form 1005 are optional:The remaining fields on the form must be completed as applicable to the borrower. When the borrower authorizes the lender to obtain verifications of employment and income directly from the employer, the lender must have the borrower sign Form 1005. Field # Title of Optional Field 11 Probability of continued employment 14 If overtime or bonus is applicable, is its continuance likely? 16 Date of applicant’s next pay increase 17 Projected amount of next pay increase 18 Date of applicant’s last pay increase 19 Amount of last pay increase 24 Reason for leaving (Part III — Verification of Previous Employment) The remaining fields on the form must be completed as applicable to the borrower. When the borrower authorizes the lender to obtain verifications of employment and income directly from the employer, the lender must have the borrower sign Form 1005. Alternatively, the lender may have the applicant sign a signature authorization form, which gives the lender blanket authorization to request the information it needs to evaluate the applicant’s creditworthiness. See

Ссылаются нормы: DirectVerificationProperlyAuthorized/alt/1, DirectVerificationProperlyAuthorized/alt/2

en · official · sha256:a09814ecbe0c6077227b3ca2630558dd4f9e8a6f9bd2865830d89e8dd3e41195

The lender must verify employment income for all borrowers whose income is used to qualify for the loan. This verification can be provided by the borrower, by the borrower’s employer, or by a third-party employment verification vendor. The standards for employment documentation are the same for DU loan casefiles as they are for manually underwritten loans. For example, paystubs, W-2s, and tax returns must meet the same requirements without regard to the underwriting method. A year end paystub reflecting earnings from the entire year is acceptable in lieu of the W-2. When employment is validated through the DU validation service using an asset verification report, the lender is not required to obtain the employment verification documentation described below. DU will provide messaging indicating the documentation required. Lenders must comply with all requirements pertaining to the DU validation service. See

Ссылаются нормы: EmploymentIncomeVerified/alt/1, EmploymentIncomeVerified/alt/2, EmploymentIncomeVerified/alt/3, EmploymentIncomeVerified/alt/4

en · official · sha256:8d93928d0aea381992e3031a76e1dfe614509039a959d73bdd1863d77653ddcb

The most recent paystub must be dated no earlier than 30 days prior to the initial loan application date and it must include all year-to-date earnings. Additionally, the most recent paystub must include sufficient information to appropriately calculate income; otherwise, additional documentation must be obtained. Paystubs must comply with B1-1-03, Allowable Age of Credit Documents and Federal Income Tax ReturnsB1-1-03, Allowable Age of Credit Documents and Federal Income Tax Returns. IRS W-2 forms must cover the most recent one- or two-year period, based on the documentation requirements for the particular income type, and must clearly identify the borrower as the employee. ”Most recent” W-2 is defined as the W-2 for the calendar year prior to the current calendar year. Alternative documentation, such as an IRS Wage and Income (W-2) Transcript, a written Request for Verification of Employment (

Ссылаются нормы: OneYearW2PeriodSufficient/alt/1, OneYearW2PeriodSufficient/alt/2, PaystubWithinAllowableAge, TwoYearW2PeriodSufficient

en · official · sha256:f23086af05577a17ce4eda0ea348c76b9ec6efc0f59e2c27c653e9c8dfb0a51f

Documents must be computer-generated or typed by the borrower’s employer(s), although paystubs that the borrower downloads from the Internet are also acceptable. Documents must clearly identify the employer’s name and source of information. The information must be complete and legible. The original source of the information must be a third party, such as the borrower's human resources department, personnel office, payroll department, company's payroll vendor, or supervisor.

Ссылаются нормы: IncomeDocumentsMeetStandards

en · official · sha256:e7b5e766586efc037362521c9083d1ab878a3fcca776bdc3be9c92bae52172e5

The lender may receive employment and income verification directly from a third-party employment verification vendor. These verifications are acceptable as long as the borrower provided proper authorization for the lender to use this verification method, the date of the completed verification is in compliance with B1-1-03, Allowable Age of Credit Documents and Federal Income Tax ReturnsB1-1-03, Allowable Age of Credit Documents and Federal Income Tax Returns, the lender has determined that the vendor has made provisions to comply with reasonable quality control requests from both the lender and any subsequent mortgagee, and the lender understands it will be held accountable for the integrity of the information obtained from this source. If necessary, the lender must supplement these verifications by obtaining any missing information from the borrower or their employer.

Ссылаются нормы: VendorVerificationAcceptable

en · official · sha256:28a786769f7d10551b4fbea3cf4b8696566d1fa871c2963444345a88658a212b

Lenders must evaluate the borrower’s work history to determine whether it reflects a reliable pattern of employment over the most recent two years. A shorter employment history may be considered eligible for qualifying purposes if the borrower’s employment profile includes positive factors that reasonably offset the shorter employment history.

Ссылаются нормы: ShorterWorkHistoryAcceptedByLender, TwoYearWorkHistoryIsReliable

en · official · sha256:5702060c0f693248296f0382df665714b2bc289a821f0ee43ef7db0e3d7eb18a

Borrowers who are employed by a family member or interested party must meet the requirements for the specific income type(s) outlined in the respective sections throughout Chapter B3–3, Income Assessment, and the following: Borrower must have been employed by the business for at least the 12 months prior to the application date. The lender must obtain copies of the most recent year’s signed federal income tax returns that reflect borrower has less than 25% ownership in the business owned by the family member or interested party. If the borrower has 25% or more ownership, the borrower must be qualified as self-employed. The borrower’s qualifying income must be consistent with the most recent year’s earnings, which must be documented with a W-2 or tax returns.

Ссылаются нормы: DuValidationExcusesFamilyDetermination, FamilyEmploymentRequirementsMet

en · official · sha256:bdd7f8acf84d855268f1e28f19a57003e465a13f587e362444c249b6e80e85ee

Foreign income is earned by a borrower who is employed by a foreign corporation or a foreign government and is paid in foreign currency. Borrowers using foreign income to qualify must meet the following requirements: Copies of signed federal income tax returns for the most recent two years that include foreign employment-related income. The lender must satisfy requirements based on the source and type of income as outlined in Chapter B3–3, Income Assessment. All documents of a foreign origin must be completed in English, or the lender must provide a translation, attached to each document, and ensure the translation is complete and accurate. All income must be translated to U.S. dollars.

Ссылаются нормы: ForeignIncomeRequirementsMet/alt/1, ForeignIncomeRequirementsMet/alt/2

en · official · sha256:0ddb876ecadad5683bf945a68afe3e8ababef6a8971e9f24ba038fed47ac96f5

Borrowers with employment gaps during the most recent 12 months may appear to have unstable employment. Lenders must carefully analyze the borrower’s current employment to ensure that it is likely to continue. Job Changes Borrowers who change jobs frequently, but who are nevertheless able to earn consistent and predictable income, are considered to have a reliable flow of income for qualifying purposes.

Ссылаются нормы: FrequentJobChangesStillReliable

en · official · sha256:ba021c93720be0d27ee789f3facba05ffbbc9df27d1678a7a18045ba42b58878

Borrowers who are qualifying with income from multiple employment sources at the same time, including self-employment, must meet the requirements for each specific income type, as well as the following requirements: A two-year history for each income source is recommended; however, income that has been received for a shorter period of time (but, no less than 12 months) may be considered as acceptable income, as long as there are positive factors to reasonably offset the shorter income history. When the borrower’s employment history includes different employers, in no instance may the borrower have any gap in employment greater than one month in the most recent 12-month period, unless the employment is considered seasonal income (subject to the requirements in

Ссылаются нормы: EmploymentGapBarsMultipleSources, GapBarsPermission, MultipleSourcesPermitted, SeasonalEmploymentExcusesGap, SeasonalOverGapBar

en · official · sha256:942f2935ee35df0d10e0c00b06d3f8d72eed22f6ee413cdf000d1781d465d1e8

Future increases in pay from the borrower's current employer may be included as qualifying income when the following requirements are met: The income is fixed base only. The transaction is a purchase money or limited cash-out refinance transaction. The increase must take effect no later than 60 days after the note date. The increase is fully verified with the employer using Form 1005, Request for Verification of Employment or other documentation directly from the employer that provides the terms of the future pay increase. Borrower must not be employed by a family member or interested party.

Ссылаются нормы: FamilyEmploymentBarsPayIncrease, FamilyEmploymentOverPayIncrease/alt/1, FamilyEmploymentOverPayIncrease/alt/2, FuturePayIncreaseIncludable/alt/1, FuturePayIncreaseIncludable/alt/2

en · official · sha256:ac55381d4e72ff8ce2499ca524300369f9b0d5fdc78e7e22aca1910636feabcf

The following table provides requirements for fixed base income. Criteria Requirements Documentation The lender must obtain a completed Request for Verification of Employment ( Form 1005), or the most recent paystub and most recent W-2. Additionally, a verbal VOE is required. See B3-3.1-04, Verbal Verification of EmploymentB3-3.1-04, Verbal Verification of Employment, for specific requirements. Income History A minimum history is not required for inclusion as qualifying income. Income Continuance The lender is not required to verify continuance unless they have reason to believe the income may not continue.

Ссылаются нормы: FixedBaseContinuanceRequiredOnBelief

en · official · sha256:99c5f37284844395b548d0e7a2b91ef456abdead3656c15080d63e0d751b0ea7

A minimum history is not required for inclusion as qualifying income.

Ссылаются нормы: FixedBaseNeedsNoHistory

en · official · sha256:1345d81f66dac6a70cac9f517711eceacd9e3a9d7a98c7e6f897668dd8e1e136

The lender must calculate fixed base income as shown in the following table. How Often Paid How to Determine Monthly Income Annually Annual gross pay / 12 months Monthly Use monthly gross payment amount Twice Monthly Twice monthly gross pay x 2 pay periods Biweekly (Biweekly gross pay x 26 pay periods) / 12 months Weekly (Weekly gross pay x 52 pay periods) / 12 months Hourly (Hourly gross pay x average # of hours worked per week x 52 weeks) / 12 months The borrower's qualifying income must be consistent with year-to-date base earnings. If year-to-date income does not reflect at least 30 days' of earnings, the lender must confirm qualifying income is consistent with the prior year's earnings.

Ссылаются нормы: FixedBaseAnnualIncome, FixedBaseHourlyAnnualIncome, FixedBaseMonthlyIncome, IncomeSourceDocumented/alt/1, IncomeSourceDocumented/alt/2, assert-21, assert-22, assert-23, assert-24, assert-25

en · official · sha256:c846f3c44e2b81b11c0f12a0a7f523fe847870fb90ab238505327d2e96623fd9

Base income is received on a regular basis, independent of additional earnings such as overtime or bonuses. It is categorized as either fixed or variable: Fixed base income refers to a set salary or fixed hourly rate with guaranteed minimum hours. These hours may have minor variances from pay period to pay period which does not alone preclude the borrower’s income from being considered fixed base income. Variable base income refers to a fixed hourly rate with fluctuating hours, or an hourly rate that varies.

Ссылаются нормы: assert-1, assert-2

en · official · sha256:62fb9c94dee2a4139716325a81495855ae94aac87d840f70afe1b75a2d22ee4a

A minimum 12-month history of receiving variable income is required.

Ссылаются нормы: VariableBaseNeedsTwelveMonths

en · official · sha256:a9d94724559b7fd69b010069bb93cce673571e01915e44c6ec81053ee7189829

The lender must calculate income using one of the two methods below. 1. Average Income: Depending on the historical trend of the income, the lender must calculate qualifying income as follows: Stable or Increasing: Calculate an average income amount using year-to-date and previous year's earning. The calculation must include a minimum of 12 months' income. Decreasing: The lender must confirm the current income level has stabilized after the decline; otherwise, the income is not eligible for qualifying. To calculate income, use the year-to-date income divided by months elapsed in the current year. 2. Average Hours: The lender must multiply the average monthly hours (based on at least the most recent 12 months) by the current fixed hourly rate.

Ссылаются нормы: VariableBaseAverageHours, VariableBaseAverageIncomeDecreasing, VariableBaseAverageIncomeStable

en · official · sha256:f058d6373ac5a277d1150dd80867690336edc9269bf7d5711cfa04a4f261369b

The following table provides requirements for variable base income. Criteria Requirements Documentation The lender must obtain a completed Request for Verification of Employment (Form 1005), or the most recent paystub and most recent W-2. Additionally, a verbal VOE is required. See B3-3.1-04, Verbal Verification of EmploymentB3-3.1-04, Verbal Verification of Employment, for specific requirements. Income History A minimum 12-month history of receiving variable income is required. Income Continuance The lender is not required to verify continuance unless they have reason to believe the income may not continue. Determination of Qualifying Income The lender must calculate income using one of the two methods below. 1. Average Income: Depending on the historical trend of the income, the lender must calculate qualifying income as follows: Stable or Increasing: Calculate an average income amount using year-to-date and previous year's earning. The calculation must include a minimum of 12 months' income. Decreasing: The lender must confirm the current income level has stabilized after the decline; otherwise, the income is not eligible for qualifying. To calculate income, use the year-to-date income divided by months elapsed in the current year. 2. Average Hours: The lender must multiply the average monthly hours (based on at least the most recent 12 months) by the current fixed hourly rate. Note: When a documented, non-recurring event outside the borrower's control temporarily prevented them from earning income, the lender may exclude that period from the income calculation. The pay raise policy in B3-3.2-02, Standards for Employment-Related IncomeB3-3.2-02, Standards for Employment-Related Income does not apply to variable income. Any pay raises for variable base income must be in place prior to closing.

Ссылаются нормы: NonRecurringEventPermitsExclusion, VariableBaseContinuanceRequiredOnBelief, VariablePayRaiseInPlaceBeforeClosing

en · official · sha256:ebfc9cff1c3a0424b59171f2cd78d43151101b0d7f2e07e710486f46d8f265df

A minimum two-year history is recommended; however, income received for a shorter period, but no less than 12 months, may be considered as acceptable if there are positive factors to reasonably offset the shorter income history.

Ссылаются нормы: BonusCommissionOvertimeTip/alt/1, BonusCommissionOvertimeTip/alt/2, BonusCommissionOvertimeTip/alt/3, BonusCommissionOvertimeTip/alt/4, ShorterHistoryOffsetByPositiveFactors, TwoYearHistorySufficient, assert-16, assert-17, assert-18, assert-19, assert-3, assert-4, assert-5, assert-6

en · official · sha256:0f206dc64b8f3b934263dece8e5b22c0223bb7ad3efd32983bfdbbd410d8cc60

The lender must determine the income frequency (for example, weekly, biweekly, monthly, quarterly, or annually) to accurately calculate the monthly income amount. Once the monthly year-to-date income amount is determined, it must be compared to the earnings from previous years. Depending on the historical trend of the income, the lender must calculate qualifying income as follows: Stable or Increasing: Calculate an average income amount using year-to-date and previous year’s earnings, divided by the number of months included in the year-to-date paystub and W-2s. The calculation must include a minimum of 12 months’ income. Decreasing: The lender must confirm the current income level has stabilized after the decline; otherwise, the income is not eligible for qualifying. To calculate income, use the year-to-date income divided by months elapsed since the income stabilized. When bonus income is used for qualification, the lender must calculate the monthly amount accurately for use in the trending analysis. For example, if a borrower receives an annual bonus on March 31st of each year, the bonus income should be annualized (divided by 12) to determine the appropriate monthly bonus amount. The lender must also ensure that all supporting documentation in the file supports the income used in the qualification process.

Ссылаются нормы: BonusCommissionAverageDecreasing, BonusCommissionAverageStable, DecreasingIncomeNotEligible, DecreasingOverGeneralEligibility, IncomeTrendDecreasing, IncomeTrendStableOrIncreasing, StabilizationOverDecreasingBar, StabilizedAfterDeclineRestoresEligibility

en · official · sha256:bcd95064dfb842a02608d335b14092e414c4e6f5e1d7f88eb81c64dfd107e83a

The lender must deliver the loan with Special Feature Code 707.

en · official · sha256:1eb87dffa1efa4ee3336fcc6af365eb8d9a473f28ec684c7812d3cf84e592821

If the borrower is scheduled to begin new employment under the terms of an employment offer or contract, the lender may deliver the loan in accordance with one of the options outlined below. The following table provides requirements for employment offers or contracts. Criteria Requirements Eligibility Option 1 Paystub Obtained Before Loan Delivery Option 2 Paystub Not Obtained Prior to Delivery The borrower must not be employed by a family member or by an interested party to the transaction. This option is limited to loans that meet the following criteria: purchase transaction, principal residence, one-unit property, the borrower must not be employed by a family member or by an interested party to the transaction, and the borrower is qualified using only fixed-base income. The borrower's start date must be no earlier than 30 days prior to the note date OR no later than 90 days after the note date.

Ссылаются нормы: EmploymentStartWithinWindow

en · official · sha256:f26dabc49fca7f70cd83ca4d63bf9df7f5fc721fb42ad439caf433fc20a70cb0

Determination of Qualifying Income The lender must use the monthly income amount in the offer letter as qualifying income.

Ссылаются нормы: OfferLetterAmountIsQualifyingIncome, assert-13

en · official · sha256:d27fcc59f289e03b73bd56548dd6db5313e7955a6ba67135643c812f2f408cc5

The lender must obtain and review the borrower's fully executed offer or contract for future employment. The documentation must clearly identify the employer and the borrower, the terms of employment, including position, type and rate of pay, and start date. Prior to delivering the loan, the lender must save the most recent paystub from the borrower (that includes sufficient information to support the qualifying income based on the offer or contract) in the loan file.

Ссылаются нормы: FamilyEmploymentBarsOfferOptionOne, FamilyOverOfferOptionOne, OfferOptionOneAvailable

en · official · sha256:13d6d4a2a1bc4f13db4e6b91b32ef451a889ef315e8cb6a76b26db30609e502a

The lender must obtain and review the borrower's fully executed and non-contingent offer or contract for future employment. The documentation must clearly identify the employer and the borrower, and the terms of employment, including position, type and rate of pay, and start date. If conditions of employment exist, the lender must confirm prior to closing that all conditions of employment are satisfied (either by verbal verification or written documentation). The lender must note this confirmation in the loan file. For a union member who works in an occupation that results in a series of short-term job assignments (such as a skilled construction worker, longshoreman, or stagehand), the union may provide the executed employment offer or contract for future employment.

Ссылаются нормы: EmploymentConditionsSatisfied, FamilyEmploymentBarsOfferOptionTwo, FamilyOverOfferOptionTwo/alt/1, FamilyOverOfferOptionTwo/alt/2, OfferOptionTwoAvailable/alt/1, OfferOptionTwoAvailable/alt/2

en · official · sha256:c38686784733e77a92c9f0982fdb18c2543ff1d1c33b94fa7baf0c09a2981b77

In addition to the amount of reserves required by DU or for the transaction, the lender must document one of the following: six months' PITIA for the subject property; or

en · official · sha256:3e9138b8b41081de7e8637d893a18b39a2880bb6267b2dbda1eda7b2234064e6

A minimum 12-month history is required. Income Continuance The lender is not required to verify continuance unless they have reason to believe the income may not continue. Determination of Qualifying Income The lender must add the full amount of the allowance to the borrower's monthly income, and not use it as an offset of the corresponding liability.

Ссылаются нормы: AllowanceFullAmount/alt/1, AllowanceFullAmount/alt/2, AllowanceNeedsTwelveMonths/alt/1, AllowanceNeedsTwelveMonths/alt/2, assert-7, assert-8

en · official · sha256:807bdfdf91ef2ee3a0c742b35bda7ae5b4c61bee1bb268ec03105a5167f6d265

Military personnel may be entitled to different types of pay ("allowances") in addition to their base pay, including but not limited to flight or hazard pay, rations, clothing allowance, quarters' allowance, and proficiency pay. The lender must carefully examine allowances that a service member receives based on their location or the nature of their job duties. The lender may include these allowances as qualifying income provided there is no indication that the income amount will be lowered, in which case the lower amount must be used for qualifying, or discontinued altogether. Determination of Qualifying Income The lender may include the full amount of the borrower's monthly base pay and allowances as qualifying income.

Ссылаются нормы: MilitaryFullAmount, MilitaryLoweredAllowances

en · official · sha256:f97a4347b88f9cacf3ed5e8a7e243094d3f65f4d3e7705ad54a7efd83e0d779c

The lender must obtain the borrower's most recent Leave and Earnings Statement (LES) dated within 120 days of the note date.

en · official · sha256:e388529ad1b7c6b6002db0160e1e38635bd4cf24bf41686111af16bbf215e8e8

Active Duty: There is no set minimum history requirement for inclusion as qualifying income. National Guard/Reserves: A minimum 12-month history is required.

Ссылаются нормы: ActiveDutyNoMinimumHistory, ReservesRequireTwelveMonths

en · official · sha256:a96bda4a17c7522e5c1568f3ecd0d333cf5502484a26be3c097d77265eb7d687

There is no set minimum history requirement for inclusion as qualifying income. Income Continuance The lender must document that the income is expected to continue for at least three years from the note date. Determination of Qualifying Income The lender may add the full amount of the payment to the borrower's monthly income, and not as an offset to the mortgage payment.

Ссылаются нормы: MortgageDifferentialFullAmount, MortgageDifferentialNeedsNoHistory, assert-9

en · official · sha256:84e7395199a8c66a2cb5691e3069008985b23190ea253c277b07669198eb76f5

The lender must obtain written verification from the borrower's employer confirming the subsidy and stating the amount and duration of the payments, such as a written agreement between the borrower and employer.

Ссылаются нормы: DifferentialIncomeDocumented

en · official · sha256:0a332543a68b45e8d5a6123569f78e0f10da495655764541db4011d2d0bd5e6c

For one-time awards: The lender must document that income on the vesting schedule is expected to continue for at least three years from the note date.

Ссылаются нормы: OneTimeAwardRequiresThreeYearContinuance

en · official · sha256:c21362964bf4f366ec001944833c11c97f7b1bcc3fe1b13faa1eff5043aa142e

The lender must also document the following: evidence stock is publicly traded; current vesting schedule reflecting past and future vesting; 200-day moving average stock price (for income paid in shares); and brokerage or bank statement showing receipt of previous year(s) distribution of restricted stock and, at a minimum, the number of vested shares or cash equivalent.

Ссылаются нормы: RestrictedStockDocumentedInCash, RestrictedStockDocumentedInShares

en · official · sha256:cc84605d29775deea8c8042e0ff8645a1c83627a269844b876a8c0c0163a98f8

Restricted stock must have vested and been distributed to the borrower without restrictions. Sign-on bonuses received in the form of restricted stock that vest over any length of time are not eligible to be used as qualifying income.

Ссылаются нормы: RestrictedStockEligible, SignOnBonusOverEligibility, SignOnBonusStockNotEligible, assert-14

en · official · sha256:0879679070d17dd2f44ab485a8411509f973c0e0881cf696a2b97d2798fec0c3

A minimum two-year history is recommended; however, income received for a shorter period, but no less than 12 months, may be considered acceptable if there are positive factors to reasonably offset the shorter income history, such as future vesting equal or greater than previous vesting and that will continue for at least 24 months; or restricted stock income received for the previous 5 years from any employer. Time-based awards: A minimum 12-month history from the current employer is required.

Ссылаются нормы: RestrictedStockShorterHistoryWithFutureVesting/alt/1, RestrictedStockShorterHistoryWithFutureVesting/alt/2, RestrictedStockShorterHistoryWithFutureVesting/alt/3, RestrictedStockTimeBasedHistory, RestrictedStockTwoYearHistory

en · official · sha256:d5659b9f7d8c59eeca6561cd9a2431a369331a35facb1ce23f35b995fe97a61a

The calculation method for restricted stock income will vary depending on whether payment is made in shares or cash. For income paid in shares: (200-day moving average of share price x total number of distributed vested shares (pre-tax) in most recent 24 months) / 24 months For income paid in cash: The cash distributed (pre-tax) equal to the total value of vested shares in the most recent 24 months / 24 months Note: When the borrower has a history of income ranging from 12-24 months, the lender may use the actual number of months the borrower has received the income rather than 24 months.

Ссылаются нормы: RestrictedStockCashFullPeriod, RestrictedStockCashShortPeriod, RestrictedStockSharesFullPeriod, RestrictedStockSharesShortPeriod

en · official · sha256:e10cf3e7e2c4c40579ed7d82e226c548c84b7745efe088fe2a4b17be3310e513

A minimum two-year history is required. Income Continuance The lender is not required to verify continuance unless they have reason to believe the income may not continue. Determination of Qualifying Income The lender must calculate an average income amount using year-to-date income, when present, and previous two years' earnings.

Ссылаются нормы: SeasonalAverageWithYearToDate, SeasonalAverageWithoutYearToDate, SeasonalNeedsTwoYears, assert-10, assert-20

en · official · sha256:7a1488f25164cc3dbed34ec5ea0d5cfe6c2c90dad0baebfe21ff9b6cafacd40f

Note: For seasonal unemployment compensation, the lender must verify that it is clearly associated with seasonal layoffs, expected to recur, and reported on the borrower's personal income tax returns. See

Ссылаются нормы: SeasonalUnemploymentVerified

en · official · sha256:9d38714335836f0d864a644f6f259638c6eb4c822c0fbf95bb8978fe03b87112

The lender must not receive any evidence or information from the borrower's employer to indicate the borrower does not have the right to return to work after the leave period.

Ссылаются нормы: RightToReturnIntact

en · official · sha256:df953d7a5b4948f6611d0b5a3c886af8aef01c29b7c7570f4de3e54133820ad9

documentation to support the borrower's qualifying income in accordance with the specific income type in Section B3-3.3, Sources of Employment-Related Income, and must include: the amount and duration of the borrower's "temporary leave income," which may require multiple documents or sources depending on the type and duration of the leave period; and the amount of the "regular employment income" the borrower received prior to the temporary leave. Regular employment includes, but is not limited to, the income the borrower receives from employment on a regular basis that is eligible for qualifying purposes (for example, base pay, commissions, and bonus). written confirmation from the borrower of their intent to return to work;

Ссылаются нормы: TemporaryLeaveDocumented

en · official · sha256:6fb7f14220ef4a813b22b4fc3d6bd16a5bec1b3e70dd7ee63397c4a9d4536418

If the borrower will return to work as of the first loan payment date, the lender can consider the borrower's regular employment income in qualifying. If the borrower will not return to work as of the first loan payment date, the lender must use the lesser of the borrower's temporary leave income (if any) or regular employment income. If the borrower's temporary leave income is less than their regular employment income, the lender may supplement the temporary leave income with available liquid financial reserves (see B3-4.1-01, Minimum Reserve RequirementsB3-4.1-01, Minimum Reserve Requirements). The following are instructions on how to calculate the "supplemental income": Supplemental income amount = available liquid reserves divided by the number of months of supplemental income Available liquid reserves: subtract any funds needed to complete the transaction (down payment, closing costs, other required debt payoff, escrows, and minimum required reserves) from the total verified liquid asset amount. Number of months of supplemental income: the number of months from the first loan payment date to the date the borrower will begin receiving their regular employment income, rounded up to the next whole number. After determining the supplemental income amount, the lender must calculate the total qualifying income. Total qualifying income = supplemental income + the temporary leave income The resulting, total qualifying income may not exceed the borrower's regular employment income.

Ссылаются нормы: SupplementalIncomeAmount, TemporaryLeaveLesserAmount, TemporaryLeaveReturnsByFirstPayment, TotalQualifyingIncomeOnLeave

en · official · sha256:42d1d3e9496505350bef68dc642ea42e70d46c3460bebde3d548bab0f5cace68

Temporary leave from work is generally employee-initiated, short in duration and for reasons, including, but not limited to maternity or parental leave, short-term medical disability, or other temporary leave types acceptable by law or to the borrower's employer. Borrowers on temporary leave may or may not be paid during their absence from work. Note: Mandatory leave initiated by an employer, such as a furlough or layoff, is not considered temporary leave regardless of an expected return to work date. For income from unemployment benefits received as a result of mandatory leave initiated by an employer, see B3-3.4-17, Unemployment Benefits IncomeB3-3.4-17, Unemployment Benefits Income. If a lender is made aware that a borrower will be on temporary leave at the time of the loan closing and that borrower's income is needed to qualify for the loan, the lender must determine allowable income and confirm employment as described below.

Ссылаются нормы: assert-15