Freddie Mac Single-Family Seller/Servicer Guide 4501.6 — Borrower income and qualifying ratios for Home Possible® Mortgages

Freddie Mac Single-Family Seller/Servicer Guide 4501.6 — Borrower income and qualifying ratios for Home Possible® Mortgages

Effective 2026-04-12 · Freddie Mac's stamp for this section

This section contains requirements related to: ■ Qualifying income ■ Rental income ■ Contribution to total qualifying income from Borrowers with insufficient credit history ■ Qualifying ratios Home Possible® Mortgages must comply with the requirements of Topics 5300 and 5400 and the requirements of this section. In the event of a conflict, the Seller must comply with the requirements of this section. (a) Qualifying income In determining the Borrower’s qualifying income in accordance with Topic 5300, the Borrowers base earnings must be considered for both non-fluctuating and fluctuating employment earnings before any additional employment earnings (e.g., bonus, commission, overtime, tips) may be considered. (b) Rental income When determining the stable monthly income (as described in Section 5301.1), rental income may be considered if generated from: ■ A 1-unit Primary Residence if the rental income requirements in Section 5306.1(h) are met ■ A 1-unit Primary Residence if the following requirements are met in lieu of the requirements in Section 5306.1(h): ❑ The person providing the rental income: ■ Must not be obligated on the Mortgage and must not have an ownership interest in the Mortgaged Premises ■ Must have resided with the Borrower for at least one year ■ Will continue residing with the Borrower in the new residence ■ Must provide appropriate documentation to evidence residency with the Borrower (e.g., driver’s license, bill, bank statement, etc., showing their address matches the Borrower’s address) ■ Cannot be the Borrower’s spouse or domestic partner ❑ Rental income from the person residing in the Mortgaged Premises: ■ Must have been paid to the Borrower for the past 12 months ■ Can be verified through evidence showing receipt of regular payments of rental income to the Borrower for at least nine of the past 12 months (e.g., copies of canceled checks) ■ Must be averaged over 12 months for qualifying purposes if fewer than 12 months of payments are documented ■ Cannot exceed 30% of total income used to qualify for the Mortgage ❑ The Mortgage file must contain a written statement in the form of a signed letter or email directly from the Borrower affirming: ■ The source of the rental income ■ The fact that the person providing the rental income has resided with the Borrower for the past year and intends to continue residing with the Borrower in the new residence for the foreseeable future ■ An ADU on a subject 1-unit Primary Residence if the rental income requirements in Section 5306.1(g) are met ■ A live-in aide residing in a 1-unit Primary Residence if the rental income requirements in Section 5306.1(h) are met ■ A subject 2- to 4-unit Primary Residence if the rental income requirements in Section 5306.1(e) are met ■ A non-subject investment property if the rental income requirements in Section 5306.1(c) are met (c) Contribution to total qualifying income from Borrowers with insufficient credit history For Manually Underwritten Mortgages, the Seller may consider as qualifying income, the income contributed by a Borrower with insufficient credit history, as described in Section 4501.5(b), provided the amount contributed by the Borrower with insufficient credit history is not more than 30% of the total qualifying income. (d) Qualifying ratios There is no maximum monthly housing expense-to-income ratio. Debt payment-to-income ratios must not exceed the following limits: Underwriting path Home Possible Mortgages Loan Product Advisor Mortgages Determined by Loan Product Advisor Manually Underwritten Mortgages 45%

Source: Freddie Mac Single-Family Seller/Servicer Guide 4501.6 — Borrower income and qualifying ratios for Home Possible® Mortgages · source URL · snapshot 4c94f67729042dd6