Selling Guide

Published December 16, 2020

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How is base income calculated?

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.

 

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