SESSION 1: FIXED INCOME

Session Overview

This presentation focuses on the comprehensive evaluation and calculation of borrower fixed income for mortgage qualifying purposes. It details risk assessment strategies, documentation standards, and precise calculation methods for various steady income sources.

Key Topics

• Risk Assessment Framework Lenders evaluate income based on three criteria: History (2 years of employment), Consistency (stable earnings), and Continuance (likelihood to last at least 3 years).
• Income Definitions Fixed (non-variable) income is characterized as stable, predictable, and occurring with regular frequency, such as base salary or social security.
• Standard Documentation Requirements typically include a paystub dated within 30 days of application and W-2s for the prior two years, or a full Verification of Employment (VOE).
• Calculation Logic Standardizing monthly income requires different formulas based on pay frequency, such as multiplying biweekly pay by 26 or weekly pay by 52 before dividing by 12.
• Non-Taxable Income Specific types of income, such as child support or Social Security, may be "grossed up" by 25% to account for their tax-exempt status.