Applications & Technology

Income Calculator

Increase certainty of loan quality for homebuyers with self-employed income

Calculating income for self-employed borrowers is not easy and can be time consuming and complicated for even the most seasoned originators. With a growing workforce of self-employed borrowers, and multiple options available, lenders need a clear way to calculate income that’s both accurate and efficient. With Fannie Mae’s latest solution, we offer a new way to calculate income that increases the certainty of the calculation and helps reduce cycle time.

Available initially through authorized technology service providers, the income calculator helps lenders:

  • Easily calculate income for self-employed borrowers.
  • Maximize the borrower’s income by utilizing allowable add-backs not found in 4506-C tax return transcript data, which may result in better pricing/lower DTI due to higher income being calculated.
  • Determine the qualifying monthly income before submitting to DU.
  • Be eligible for enforcement relief of rep and warrant on the income calculation.

Income Calculator Availability

Every day, 24 hours a day, except from 1 a.m. to 5 a.m. ET the first and third Sundays each month due to maintenance.

Learn more about the Income Calculator

How the Income Calculator Works

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Borrower provides lender with tax returns during the application process or authorizes technology service provider (TSP) to extract tax return data from authoritative source (such as an e-filer).

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Lender requests TSP to extract data from tax returns (provided either by the lender or obtained directly by the TSP from another authoritative source). *

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Tax return data is submitted to the income calculator, and the results are relayed to the lender through the TSP interface.

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Lender validates the accuracy of the data provided to the calculator by the TSP.

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Lender retains a findings summary in the loan file.

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Lender submits the qualifying income amount to DU or uses the amount to manually underwrite the loan. If all conditions are met, the loan is eligible for enforcement relief from reps and warrants related to the income calculation.

*(Coming soon) In our future web interface offering, lenders can input data from tax returns directly.

Other available methods to calculate self-employed income include:

DU validation service – Lenders using DU can leverage the DU validation service and tax return transcripts from an authorized report provider to verify self-employed income for sole proprietors – Schedule C.

Approved vendor tools – Fannie Mae accepts the calculations provided by approved vendor tools .

  Fannie Mae Income Calculator integrated through TSP Fannie Mae Income Calculator web interface (coming soon) DU validation service Approved vendor tools
What data is needed? Tax returns Tax returns Tax transcripts Tax returns
How is the data extracted? Exported from e-filers or Optical Character Recognition technology   Manual data input Report provider obtains data from IRS Optical Character Recognition
Component eligible for enforcement relief of reps and warrants? Income calculation Income calculation Income calculation and data integrity Income calculation
When is the tool available? Now Coming soon Now (through DU) Now
Is there a cost? Yes – through contract with an authorized TSP No Yes – through contract with an authorized report provider Yes – through contract with an approved vendor
What is the response time? ~2 hours based on TSP response Immediate ~5 days based on IRS response ~2 hours based on vendor response
Does it collect NPI? No No Yes Yes
What self-employment types are eligible for enforcement relief? All self-employment types, excluding rental income (varies by TSP) All self-employment types, excluding rental income Sole Proprietors - Schedule C All self-employment types, including self-employment income generated from rental properties
Who maintains the calculation? Fannie Mae Fannie Mae Fannie Mae Vendor (with Fannie Mae oversight)

Get Started Today

These TSPs have entered into an agreement to offer the Fannie Mae Income Calculator. Contact one of the TSPs to get started.

CoreLogic   PointServ