A borrower provides a W-2 showing gross income of $60,000 for the most recent year and $55,000 for the prior year. What is the appropriate method for calculating qualifying income?
Correct Answer
B) Average the two years: ($60,000 + $55,000) ÷ 2 = $57,500
According to Fannie Mae and Freddie Mac guidelines, when a borrower has a two-year employment history, income should be averaged over the two-year period unless the income is declining, in which case additional analysis is required.
Why This Is the Correct Answer
According to Fannie Mae and Freddie Mac guidelines, when a borrower has a two-year employment history, income should be averaged over the two-year period unless the income is declining, in which case additional analysis is required.
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