The Everyday Underwriter MasterClass · Income Calculation Suite
The Everyday Underwriter MasterClass · Income Calculation Suite
Use lowest of: per-hour × hours × 52÷12, YTD average, or W-2 average. If YTD is declining from prior year, use lower amount and confirm reason in LOE.
Use base salary type that matches the pay frequency. If YTD or prior year is lower than base — confirm reason. Otherwise use lower of YTD and W-2.
OT/Bonus requires 2-year receipt history documented on W-2s. If income is declining year over year use the lower year. If no 2-year history — exclude entirely.
Commission income is averaged over 2 years net of unreimbursed expenses. Can be standalone or added to base. Requires 2-year history on W-2s.
Net rental losses are typically included with liabilities when calculating the debt ratio. Check applicable guidelines when rental income is declining year to year. This method should not be used when calculating rental income on a borrower's primary residence.
Consider business liquidity and solvency before using business income. Declining income requires use of lower year only. Add-backs are non-cash items that reduce taxes but are allowable for qualifying.
Consider business liquidity and solvency before using business income. Declining income requires use of lower year only. Add-backs are non-cash items that reduce taxes but are allowable for qualifying.