Minimize Defects With Fannie Mae’s Income Calculator
Complex calculations from self-employment and rental income have historically been top defects in Fannie Mae’s random quality control (QC) sample. Questions about these calculations are some of the most-requested topics on Fannie Mae’s Ask Poli. Help ensure efficiency and minimize quality risk on these income calculations by leveraging Fannie Mae’s award-winning Income Calculator.
What Is Income Calculator?
Income Calculator is a free, web-based, self-serve tool mortgage professionals can use to accurately calculate complex borrower incomes and increase certainty for lenders.
Loan officers, underwriters, QC specialists — anyone in the mortgage ecosystem — can use Income Calculator to obtain accurate calculations for borrowers with income from self-employment, business ownership, or rental properties. The calculator gives the maximum qualifying income based on data provided, ensuring accurate risk assessments.
Income Calculator takes away any guesswork by aligning with Fannie Mae’s Selling Guide policy and providing users with confidence in their risk assessment. Use of the tool by lenders may offer relief of representations and warranties on the income calculation. Income Calculator features easy-to-follow, step-by-step instructions to calculate the qualifying income based on user-provided data. This resource can calculate income using data from both personal and business tax returns, including 1040 Schedules C and E and Forms 1065, 1120-S, 1120, and 8825. Users receive immediate results with a downloadable Findings Report for the loan file. Using Desktop Underwriter® (DU®) is not required.
Beyond entering data into Income Calculator for a single loan, integration of the tool’s functions is available for an approved loan origination system (LOS). Fannie Mae also works with service providers offering the option to extract data from uploaded tax returns or transcripts and get back a data file for import into the web interface. Other service providers offer an end-to-end solution by extracting the tax return data, submitting the data file to Income Calculator, and delivering results back to you.
Income Calculator is a free, web-based, self-serve tool mortgage professionals can use to accurately calculate complex borrower incomes and increase certainty for lenders.
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Data input: Income Calculator
Who should use Income Calculator?
Income Calculator is designed for wide-spread adoption across the mortgage industry and is suited for use at every stage of the loan process:
- Loan officers can get an accurate income calculation they can use to pre-qualify borrowers prior to their submission of the loan application.
- Underwriters or others involved in the loan manufacturing process can get an official and reliable income calculation to enhance their ability to focus on other risk factors.
- QC specialists can verify the work of income calculations, done with or without the tool.
- Aggregators can ask their broker and third-party originator (TPO) partners to use the tool so that rep-and-warrant relief comes with the loans they acquire and sell to Fannie Mae.
- Trainers can help new underwriters or other team members understand what income points are necessary for more complex income calculations.
Action items
Try Income Calculator. Learn its capabilities. How can it strengthen any weak spots in your origination process?
Determine how and where to incorporate Income Calculator into your origination process. Do loan officers and underwriters have the required level of knowledge to correctly calculate these complex income types? Are your current income calculation tools sufficient to minimize your risks?
Understand how Income Calculator can help strengthen QC. See the value of how Income Calculator can streamline QC reviews and eliminate back-and-forth rebuttals. Do calculations of self-employment and rental income create repurchase exposure?
Consider the risk of not utilizing Income Calculator. Do you value rep-and-warrant relief on self-employment and rental income calculations?
Review if an integration into your LOS makes financial sense. Can you speed up the loan process and increase certainty by bringing this tool into your loan manufacturing process?
