Fannie Mae allows variable income such as stipend payments to be considered as acceptable income if the borrower has received it for 12-24 months and can demonstrate positive factors that offset the shorter income history.
Fannie Mae requires documentation of the stipend income received for the most recent 12 months and proof that it will continue for at least 3 more years in order for it to be counted on a mortgage application.
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Typically, lenders are hesitant to consider short-term stipend income for mortgage applications because the income is only temporary in nature.
If a borrower's primary source of income is stipend payments, they may have a harder time qualifying for a mortgage on their own and may need to apply with a co-borrower who has a full-time, salaried income.
Fannie Mae's Income Calculator tool allows lenders to input borrower tax return data and immediately generate a response on the qualifying income, without collecting any non-public personal information.
Freddie Mac's guidelines state that if the increasing income is due to a pay raise, the lender may use a specific calculation method to account for the income trend analysis.
Fannie Mae's Area Median Income Lookup Tool allows users to easily determine their area's median income eligibility for HomeReady mortgage programs by entering their address or FIPS code.
Freddie Mac's guidelines permit lenders to "gross up" certain types of non-taxable income, such as 15% of Social Security benefits, to account for the tax-exempt status.
Fannie Mae provides specific guidance on how to calculate different types of income, such as base pay, bonus, overtime, and military income.
Fannie Mae does not have a stated age minimum for a borrower to use retirement income to qualify, but the borrower must have unrestricted access to the funds without penalty.
Fannie Mae's guidelines allow lenders to consider temporary leave income, but the documentation required may vary depending on the type and duration of the leave period.
Fannie Mae's Selling Guide contains detailed information on various loan eligibility factors, including principal curtailments and the use of income from retirement and employment.
Lenders can contact their Fannie Mae Account Team if they have any questions about interpreting or applying the guidelines related to stipend income or other income sources.
Fannie Mae's income documentation requirements may be more flexible for borrowers with consistent income trends, even if the increases year-over-year exceed 10%.
The GSE's guidelines on stipend income aim to balance the need for stable, long-term income with the recognition that some borrowers may have variable income sources that can still support homeownership.
Fannie Mae's policies on stipend income are designed to expand access to mortgage credit, while still maintaining prudent underwriting standards to ensure the loans are sustainable for borrowers.
The specific requirements around stipend income may vary based on the type of stipend, the duration of the payments, and the borrower's overall financial profile and creditworthiness.
Fannie Mae's income guidelines are updated regularly to reflect changes in the mortgage market and to address emerging trends in borrower income sources and documentation.
Lenders must carefully review and document the stipend income in accordance with Fannie Mae's guidelines to ensure the borrower's ability to repay the mortgage over the long term.
The treatment of stipend income under Fannie Mae's guidelines is an example of the GSE's efforts to balance flexibility and risk management in its underwriting policies.