How is temporary leave income entered in DU?

Temporary Leave Income

When income from temporary leave is being used to qualify for the mortgage loan, the lender must enter the appropriate qualifying income amount into DU based on the requirements provided in B3-3.1-09, Other Sources of Income. 

• If the borrower will return to work as of the first mortgage payment date, the lender can consider the borrower's regular employment income in qualifying and must enter the income into DU using the applicable income type. 

• If the borrower will not return to work as of the first mortgage payment date, but is able to qualify using the lesser of the borrower's temporary leave income (if any) or regular employment income, that “lesser of” income amount must be entered into DU. Entry of the income into DU depends on what was derived as the “lesser of” amount: 
  • When the borrower's temporary leave income is used, enter the income amount into DU as an Other Monthly Income amount of “Temporary Leave.” 
  • When the borrower's regular employment income is used, enter the income amount in DU using the applicable income type. 

• If the borrower's temporary leave income is less than the regular employment income and the lender is able to “supplement” the temporary income with available liquid reserves (per B3-3.1-09, Other Sources of Income), the following must be applied: 
  • The lender must enter the combined temporary leave income and supplemental income from reserves in DU as an Other Monthly Income amount of “Temporary Leave.” The combination of these two incomes may not exceed the borrower's regular monthly employment income.
  • As DU is not able to determine that supplemental income is being used, nor is it able to determine the amount of reserves used to supplement the temporary income, the lender must manually reduce the amount of the borrower's total liquid assets by the amount of reserves used to supplement the temporary income (in order to avoid the reserves being used for both income and assets).

See B3-3.5-01, Income and Employment Documentation for DU for additional information.