Interest and Dividend Income
The taxable interest and dividend income that is reported on IRS Form 1040, Schedule B, may be counted as stable income only if it has been received for the past two years. However, the income cannot be counted if the borrower is using the interest-bearing or dividend-producing asset as the source of the down payment or closing costs.
Any taxable interest or dividend income that is not recurring must be deducted from the borrower’s cash flow.
Tax-exempt interest income may be counted as stable income only if it has been received for the past two years and is expected to continue. If so, this income can be added to the borrower’s cash flow.
For additional information, see B3-3.3-02, Income Reported on IRS Form 1040.