Income & Employment Verification Flashcards
7 cards from real CRU practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Income & Employment Verification flashcards as text
For a salaried borrower, how many years of W-2s does Fannie Mae typically require to document employment income?
Answer: Two years
Fannie Mae standard guidelines require two years of W-2s to establish a consistent history of salaried income.
A borrower has been self-employed for 18 months. Under standard agency guidelines, how is this income typically treated?
Answer: It cannot be used until the borrower has a two-year self-employment history
Agency guidelines generally require a two-year self-employment history before that income can be used for qualifying purposes.
Which document is the primary tool used by underwriters to verify a borrower's year-to-date earnings from an employer?
Answer: Pay stub
A recent pay stub shows current YTD earnings and is the primary document for verifying current income levels.
When calculating qualifying income for an hourly employee who works variable hours, the underwriter should:
Answer: Average the income over the most recent two-year period
Variable income for hourly workers should be averaged over two years to account for fluctuations in hours worked.
A borrower receives bonus income of $12,000 in one year and $8,000 the prior year. The current base salary is $60,000. What qualifying income should the underwriter use?
Answer: $70,000 ($60,000 base + $10,000 averaged bonus)
Bonus income that has been received for two years may be averaged and added to base salary to determine qualifying income.
A borrower is a commissioned salesperson earning 100% commission. What documentation is typically required beyond pay stubs?
Answer: Two years of personal tax returns to verify commission income
For borrowers earning 100% commission, two years of personal tax returns are required to verify the consistency and stability of that income.
Under agency guidelines, how long must a borrower typically be in a new job position before that income can be used for qualification?
Answer: The income can be used immediately upon start date with an offer letter
If the new job is in the same field and an offer letter or employment contract confirms the income, it may generally be used immediately at loan closing.