B3-3.1-01, General Income Information (03/04/2026)

A stable and predictable flow of income is a foundational element in loan underwriting, and documenting that the income is stable, has a documented history of receipt, and is reasonably expected to continue.

Borrowers must be qualified with income the lender can reasonably expect to continue for the foreseeable future. The lender must evaluate the likelihood of continuance based on the nature of the income and supporting documentation.

• If the income does not have a defined expiration date and the applicable history of receipt of the income is documented (per the specific income type), the lender may conclude that the income is likely to continue and the lender is not expected to obtain additional documentation, unless there is information to the contrary.
• If the income source does have a defined expiration date or is dependent on the depletion of an asset account or other limited benefit, the lender must document that the income is expected to continue for at least three years from the note date. Additionally, when an asset account is the sole or majority source of qualifying income, the lender must assess the borrower’s ability to continue repaying the loan once the income source expires or the asset is depleted prior to loan maturity.
• If the lender is notified that the borrower is transitioning to a lower pay structure, for example due to pending retirement or a new job, the lender must use the lower income amount in qualifying, and must determine that the lower amount is stable and predictable.

See Chapter B3-3, Income Assessment for topics with additional information and requirements for continuance of income. 

Borrowers who are not U.S. citizens must meet the same employment and income verification requirements that are required for borrowers who are U.S. citizens, regardless of the type or source of income. For information on a borrower earning foreign income, See B3-3.2-02, Standards for Employment-Related IncomeB3-3.2-02, Standards for Employment-Related Income.For non-U.S. citizen borrower eligibility, see B2-2-02, Non–U.S. Citizen Borrower Eligibility RequirementsB2-2-02, Non–U.S. Citizen Borrower Eligibility Requirements.

Income from a non-occupant borrower may be considered in qualifying for both DU and manually underwritten loans provided the income meets the same standards as required for occupying borrowers.  For information about restrictions to the down payment, DTI, maximum LTV, CLTV, and HCLTV  that apply to loans with a non-occupant borrower, see B2-2-04, Guarantors, Co-Signers, or Non-Occupant Borrowers on the Subject TransactionB2-2-04, Guarantors, Co-Signers, or Non-Occupant Borrowers on the Subject Transaction.

For manually underwritten loans, this income can offset certain weaknesses that may be in the occupant borrower’s loan application, such as limited income, financial reserves, or limited credit history. However, it may not be used to offset significant or recent instances of major derogatory credit in the occupant borrower’s credit history. The occupant borrower must still reasonably demonstrate a willingness to make the mortgage payments and maintain homeownership.

The lender should give special consideration to sources of income that may be nontaxable. The lender must verify that the particular source of income is nontaxable, using documentation such as award letters, policy agreements, account statements, tax returns or any other documents that address the nontaxable status of the income. Any exceptions to the required documentation can be found within the details of each specific income type. 

If the income is verified to be nontaxable, and the income and its tax-exempt status are likely to continue, the lender should develop an “adjusted gross income” for the borrower by adding an amount equivalent to 25% of the nontaxable income to the borrower’s income.

If the actual amount of federal and state taxes that would generally be paid by a wage earner in a similar tax bracket is more than 25% of the borrower’s nontaxable income, the lender may use that amount to develop the adjusted gross income, which should be used in calculating the borrower’s qualifying ratio.

Any income paid to or earned by the borrower in the form of virtual currency, such as cryptocurrencies, is not eligible to be used to qualify for the loan.

For certain high LTV refinance loans, the lender is not required to follow the income documentation requirements described in this Chapter. Additionally, DU offers a reduced level of income documentation for High LTV Refinance loans. See Chapter B5-7, High Loan-to-Value Refinance Option for specific requirements.

DU indicates the minimum income verification documentation required to process a loan application. This level of documentation may not be adequate for every borrower and every situation. The lender must determine whether additional documentation is warranted. If the lender is unable to determine the stability of the borrower’s income on the basis of the available documentation, the income must be removed and the loan resubmitted to DU.  

When employment or income is validated by the DU validation service, DU will issue a message indicating the required documentation. This documentation requirement may differ from those described below. See B3-2-02, DU Validation ServiceB3-2-02, DU Validation Service for more information.

Refer to DU Job Aids for information regarding data entry to DU.