Income Calculation/Payout Stream
Divide “Net Documented Assets” by the amortization term of the mortgage loan (in months).
“Net documented assets” are equal to the sum of eligible assets minus:
(a) the amount of the penalty that would apply if the account was completely distributed at the time of calculation; and
(b) the amount of funds used for down payment, closing costs, and required reserves.
| Example: Calculation of Net Documented Assets | |
|
IRA (made up of stocks and mutual funds) |
$ 500,000 |
|
Minus 10% of $500,000 ($500,000 x .10) (Assumes a 10% penalty applies for early distribution, which must be levied against any cash being withdrawn for closing the transaction as well as the remaining funds used to calculate the income stream.) |
(-) $50,000 |
|
Total eligible documented assets |
(=) $ 450,000 |
|
Minus funds required for closing (down payment, closing costs, reserves) |
(-) $100,000 |
|
Net Documented Assets |
(=) $350,000 |
|
Monthly income calculation ($350,000/360 (or applicable term of loan in months)) |
$972.22/month |
For additional information, refer to B3-3.1-09, Other Sources of Income