Important Notice: Our web hosting provider recently started charging us for additional visits, which was unexpected. In response, we're seeking donations. Depending on the situation, we may explore different monetization options for our Community and Expert Contributors. It's crucial to provide more returns for their expertise and offer more Expert Validated Answers or AI Validated Answers. Learn more about our hosting issue here.

How is compliance income calculated?

April 26, 2017calculated compliance income

0

Posted

How is compliance income calculated?

1 Answer

0

Posted

First, we need to distinguish between bond qualifying income and credit qualifying income. Credit qualifying income is the income your underwriter calculates to determine the borrower’s ability to repay the mortgage loan while bond qualifying income is defined as “the gross monthly income, multiplied by 12, of all mortgagors living in the subject property and liable on the mortgage loan”. Bond qualifying income includes current monthly gross pay plus any additional income from bonuses, commissions, overtime, child support, alimony, unemployment, etc. regardless of whether or not this supplemental income is included in the credit qualifying income. To calculate bond qualifying income, (i) calculate the borrower(s) current monthly base pay, then (ii) take a twelve month average of the borrower(s) supplemental income, bonus, commission, overtime, etc. and add it to the borrower(s) monthly base pay. Multiply the monthly base and supplemental income by 12 to get an annual figure.