Selling Guide

Published December 16, 2020

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What are the requirements for mortgage differential payments as income?

Mortgage Differential Payments Income

An employer may subsidize an employee’s mortgage payments by paying all or part of the interest differential between the employee’s present and proposed mortgage payments. When calculating the qualifying ratio, the differential payments should be added to the borrower’s gross income. The payments may not be used to directly offset the mortgage payment, even if the employer pays them to the mortgage lender rather than to the borrower.

Verification of Income From Mortgage Differential Payments
  Obtain written verification from the borrower’s employer confirming the subsidy and stating the amount and duration of the payments.
  Verify that the income can be expected to continue for a minimum of three years from the date of the mortgage application.

If this income is used on a purchase transaction, current receipt is not required to be documented except as verified in the employer letter. For refinance transactions where the income is continuing with the new loan, the recent receipt must be in compliance with the Allowable Age of Credit Documents policy (see B1-1-03, Allowable Age of Credit Documents and Federal Income Tax Returns, for additional information).

 

For additional information, see B3-3.1-09, Other Sources of Income.

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