Fannie Mae variable income: calculate the trend before choosing the average
The March income update consolidated bonus, commission, overtime and tip income and addressed documented nonrecurring gaps.
Match the cadence
Compare comparable monthly rates across the prior year and year-to-date period. For an annual bonus received in March, dividing the payment by three months overstates the monthly cadence. The Selling Guide example annualizes that payment over twelve months for trend analysis.
Pick the appropriate calculation
The guide distinguishes stable or increasing income from declining income. A stable or increasing calculation averages the covered earnings and months, with at least twelve months in the calculation. A declining trend calls for evidence of stabilization and a supported period after stabilization.
Document any exclusion
A gap is not automatically removed. If the applicable rule permits excluding a documented nonrecurring event outside the borrower’s control, keep the dates, explanation and supporting evidence with the file.