Selling Guide

Published April 07, 2021

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What are the requirements for tip income?

Tip Income

The following table provides verification requirements for tip income.

Verification of Tip Income
  Obtain the following documents:
  • a completed Request for Verification of Employment (Form 1005 or Form 1005(S))*, or
  • the borrower’s recent paystub, and
  • IRS W-2 forms covering the most recent two-year period or the most recent two years tax returns with IRS Form 4137, Social Security and Medicare Tax on Unreported Tip Income, to verify tips not reported by the employer.

See B3-3.1-02, Standards for Employment Documentation, for additional information.

  Tip income may be used to qualify the borrower if the lender verifies that the borrower has received it for the last two years.
  The lender must determine the amount of tip income that may be considered in qualifying the borrower. Refer to the Variable Income section of B3-3.1-01, General Income Information, for additional information.

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

*For a complete list of forms used in fulfilling requirements contained in the Selling and Servicing Guides, see the Guide Forms page.

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