CRU Income & Employment Verification

Question 1

For a salaried borrower, how many years of W-2s does Fannie Mae typically require to document employment income?

Accepted Answer

Two years

Answer

Fannie Mae standard guidelines require two years of W-2s to establish a consistent history of salaried income.

Question 2

A borrower has been self-employed for 18 months. Under standard agency guidelines, how is this income typically treated?

Accepted Answer

It cannot be used until the borrower has a two-year self-employment history

Answer

Agency guidelines generally require a two-year self-employment history before that income can be used for qualifying purposes.

Question 3

Which document is the primary tool used by underwriters to verify a borrower's year-to-date earnings from an employer?

Accepted Answer

Pay stub

Answer

A recent pay stub shows current YTD earnings and is the primary document for verifying current income levels.

Question 4

When calculating qualifying income for an hourly employee who works variable hours, the underwriter should:

Accepted Answer

Average the income over the most recent two-year period

Answer

Variable income for hourly workers should be averaged over two years to account for fluctuations in hours worked.

Question 5

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?

Accepted Answer

$70,000 ($60,000 base + $10,000 averaged bonus)

Answer

Bonus income that has been received for two years may be averaged and added to base salary to determine qualifying income.

(CRU) Certified Residential Underwriter Practice Test

(CRU) Certified Residential Underwriter Practice Test

CRU Income & Employment Verification