Update on Self-Employed Income Analysis for Conventional Loans
Dear Licensed Partner,
Fannie Mae announcement 2014-16 clarified and updated the requirements on analysis and verification of qualifying income for self-employed borrowers.
Effective for all conventional loans submitted on or after March 23, 2015, Sun West will require the following documentation when business income is reported on Schedule K1 and used for qualification:
A) Income Documents:
o Form 1065 for Partnerships/LLCs
o Form 1120S for S-Corporations/LLCs
B) If the borrower’s ownership is 25% or greater, qualifying income from business will be calculated using the LESSER of:
Sun West Mortgage Company, Inc. will perform an analysis of borrower’s business income to determine stability and continuance.
C) Use of Business Asset:
Additional documentation may be required, such as several months of recent business asset statements and/or current balance sheet.
D) Income Verification for Self-Employed Co-Borrowers:
If you have any questions, please contact your Client Relations Manager at (855) OK-SUNWEST or (855) 657-8693.
This information is provided to licensed brokers/lenders only and may not be copied or distributed to customers or potential customers. All loans are subject to approval. Certain restrictions may apply. Listed pricing is a morning indication only. Program rates, prices, guidelines, fees, costs, terms and conditions are subject to change without notice.