The income sources discussed in this topic must be documented by obtaining the following:
the borrower’s recent paystub and IRS W-2 forms covering the most recent two-year period. (Signed federal income tax returns may also be required to verify unemployment income related to seasonal employment.)
A verbal VOE is also required from each employer. See B3-3.1-07, Verbal Verification of Employment, for specific requirements.
As these income types may be hourly or seasonal, refer to B3-3.1-01, General Income Information (7/25/2017), for additional information on calculating variable income. Also see B3-3.1-02, Standards for Employment Documentation, for additional information about verifying employment income.
Secondary employment income is income that is derived from a second job or multiple jobs the borrower may have. The lender must verify the following.
|✓||Verification of Secondary Employment Income|
|Verification of a minimum history of two years of uninterrupted secondary employment income is recommended. However, income that has been received for a shorter period of time (no less than 12 months) may be considered as acceptable income, as long as there are positive factors to reasonably offset the shorter income history.|
|A borrower may have a history that includes different employers, which is acceptable as long as income has been consistently received.|
The lender must verify the following for seasonal income.
|✓||Verification of Seasonal Income|
|Verify that the borrower has worked in the same job (or the same line of seasonal work) for the past two years.|
|Confirm with the borrower’s employer that there is a reasonable expectation that the borrower will be rehired for the next season.|
|For seasonal unemployment compensation, verify
that it is appropriately documented, clearly associated with seasonal
layoffs, expected to recur, and reported on the borrower’s
signed federal income tax returns. Otherwise, unemployment compensation
cannot be used to qualify the borrower. See B3-3.1-09, Other Sources of Income, for more information on unemployment
Note: Seasonal and non-seasonal unemployment compensation may be used in qualifying a borrower for a DU Refi Plus or Refi Plus mortgage loan. See B5-5.2-02, DU Refi Plus and Refi Plus Underwriting Considerations, for income documentation requirements.
The table below provides references to the Announcements that have been issued that are related to this topic.