B3-3.4-06, Employment Related Assets as Qualifying Income (03/04/2026)

If the loan does not meet the below parameters, employment-related assets may still be eligible under other standard income guidelines, such as B3-3.4-08, Interest and Dividend IncomeB3-3.4-08, Interest and Dividend Income or B3-3.4-03, Annuity, Pension, or Retirement IncomeB3-3.4-03, Annuity, Pension, or Retirement Income.

• Assets used for the calculation of the monthly income stream must be owned individually by the borrower, or the co-owner of the assets must be a co-borrower on the loan.
• The documentation must be in compliance with B1-1-03, Allowable Age of Credit Documents and Federal Income Tax ReturnsB1-1-03, Allowable Age of Credit Documents and Federal Income Tax Returns.
• If a penalty would apply to a distribution of funds from the account made at the time of calculation, then the amount of such penalty applicable to a complete distribution from the account (after costs for the transaction) must be subtracted to determine the income stream from these assets.
• The borrower must only be considered to have unrestricted access to a 401(k) or IRA, SEP, Keogh retirement account if the borrower has, as of the time of calculation, the unqualified and unlimited right to request a distribution of all funds in the account (regardless of any possible tax withholding or applicable penalty applied to such distribution).
• If eligible employment-related assets have been liquidated and placed into a trust within 12 months of the loan's application date, income must be calculated in accordance with the requirements in this table.

Ineligible assets are non-employment-related assets (for example, stock options, non-vested restricted stock, lawsuits, lottery winnings, sale of real estate, inheritance, and divorce proceeds). Checking and savings accounts are generally not eligible as employment-related assets, unless the source of the balance in a checking or savings account was from an eligible employment-related asset (for example, a severance package or lump sum retirement distribution). Virtual currency is not an eligible asset.

The lender must obtain evidence the assets are liquid and available to the borrower and must be sourced using one of the following:

• A non-self-employed severance package or non-self-employed lump sum retirement package (a lump sum distribution) - these funds must be documented with a distribution letter from the employer (Form 1099-R) and deposited to a verified asset account.
• For 401(k) or IRA, SEP, Keogh retirement accounts - the borrower must have unrestricted access to the funds in the accounts and can only use the accounts if distribution is not already set up or the distribution amount is not enough to qualify. The account and its asset composition must be documented with the most recent monthly, quarterly, or annual statement.

The lender must divide "Net Documented Assets" by the amortization term of the loan (in months).

"Net Documented Assets" are equal to the sum of eligible assets minus

• the amount of the penalty that would apply if the account was completely distributed at the time of calculation; and
• the amount of funds used for down payment, closing costs, and required reserves.