Selling Guide

Published April 07, 2021

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How do I calculate employment-related assets as income?

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(Assumes a 10% penalty applies for early distribution, which must be levied against any cash being withdrawn for closing the transaction as well as the remaining funds used to calculate the income stream.)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

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