For a Fannie Mae loan assessed under the March 2026 income guidance, annual bonuses fell from $14,000 to $8,000. The lender cannot establish that the current bonus level has stabilized. How should bonus qualifying income be handled?
Correct Answer
D) Do not use it unless stabilization is established; a two-year average does not cure the decline
D. Exclude the declining bonus income unless stabilization is established. The documented decline requires a stability assessment before an income calculation can establish eligibility. An $11,000 historical average masks the downward trend; choosing $8,000 does not itself prove stability. Scope and exceptions: This is the specified Fannie Mae guidance, not a universal statutory rule. After stabilization, apply the guide's income-since-stabilization calculation and documentation requirements; the two annual figures alone do not supply those inputs. Source: B3-3.3-02 (03/04/2026): Determination of Qualifying Income — https://selling-guide.fanniemae.com/sel/b3-3.3-02/bonus-commission-overtime-and-tip-income
Why This Is the Correct Answer
D. Exclude the declining bonus income unless stabilization is established. The documented decline requires a stability assessment before an income calculation can establish eligibility. An $11,000 historical average masks the downward trend; choosing $8,000 does not itself prove stability. Scope and exceptions: This is the specified Fannie Mae guidance, not a universal statutory rule. After stabilization, apply the guide's income-since-stabilization calculation and documentation requirements; the two annual figures alone do not supply those inputs.
Why the Other Options Are Wrong
Option A: Use $14,000 annually because it shows the borrower's earning capacity
Past peak earnings do not establish current qualifying income.
Option B: Use $11,000 annually because a two-year average always controls
A two-year average is not an automatic override.
Option C: Use $8,000 annually automatically because it is the lower figure
The lower figure still needs the required stability support.
Exam Tip
Resolve a declining trend before averaging income.
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