Base Income Calculation Guidelines
After the applicable income documentation has been obtained, the lender must calculate the borrower’s eligible qualifying base income. The following table provides guidance for standard employment documentation:
| 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 |
| All of the above calculations must be compared with the documented year-to-date base earnings (and past year earnings, if applicable) to determine if the income amount appears to be consistent. See B3-3.1-01, General Income Information , for additional information about variable income (bonus and overtime). | |
For additional information, see B3-3.1-03, Base Pay (Salary or Hourly), Bonus, and Overtime Income.