Freddie Mac Single-Family Seller/Servicer Guide 5305.1 — Requirements for all other income (non-employment/non-self- employment)

Refer to Bulletin 2026-10, which announced updates related to accumulated assets as income. Sellers may implement the new requirements prior to the mandatory February 3, 2027 version of this section. This section contains: ■ Requirements applicable to all other income types ■ Alimony, child support or separate maintenance payments requirements ■ Capital gains requirements ■ Dividend and interest requirements ■ Foster-care income requirements ■ Housing Choice Voucher (HCV) homeownership program (also referred to as Section 8) requirements ■ Housing or parsonage allowance requirements ■ Long-term disability income requirements ■ Mortgage Credit Certificates requirements ■ Notes receivable requirements ■ Public assistance income (e.g., Temporary Assistance for Needy Families (TANF)) requirements ■ Retirement account distributions as income requirements ■ Retirement income requirements ■ Royalty payments requirements ■ Social Security Supplemental Security Income (SSI) requirements ■ Survivor and dependent benefit income requirements ■ Trust income requirements ■ Tax-exempt income requirements ■ Additional requirements for income from a foreign source (i.e., non-employment/non-self-employment income)

(a) Requirements applicable to all other income types The Seller must evaluate the stability, consistency and continued receipt of all other income (i.e., non-employment/non-selfemployment income) used for qualifying, including income types not specifically addressed in this section. The Seller must: ■ Determine whether documentable continuance is applicable ■ Consider factors that include, but are not limited to: ❑ Whether the payments are received pursuant to a written agreement, court decree, government program, law and/or regulation ❑ The length of time the payments have been received ❑ The regularity of receipt of the income ❑ The consistency of the amount of income ❑ The availability of procedures to compel payment ❑ Whether full or partial payments have been made ❑ The age of each child for which support and/or benefit payments are made (if applicable) ❑ Applicable eligibility criteria governing the continued receipt of the income For general requirements with respect to income history, stability and continuance, refer to Section 5301.1.

(b) Alimony, child support or separate maintenance payments requirements The following table contains the requirements for income from alimony, child support and separate maintenance payments: Alimony, child support or separate maintenance payments Topic Stable monthly income requirements Minimum history of receipt Payments in the full amount must have been consistently received for the most recent six months. The income must not be considered for qualifying if any of the following apply: ■ The payor has been obligated to make payments for less than six months ■ The payments are not for the full amount ■ The payments are not received on a consistent basis Continuance Document the payor is obligated to make payments to the Borrower for at least three years from the Application Received Date. Alimony, child support or separate maintenance payments Topic Stable monthly income requirements Documentation ■ Documentation of the payor’s obligation(s) for the previous six months, including the amount and the duration of the obligation, with one or more of the following: ❑ Signed court order ❑ Final divorce decree ❑ Legally binding separation agreement ❑ Legally binding child support agreement ❑ Other legally binding documentation ■ For child support income, evidence of the ages of the children for which child support is received ■ Receipt of the alimony, child support and/or separate maintenance payments for the most recent six months. Documentation of receipt must include one or more of the following: ❑ Evidence that the payments were cashed or deposited into the Borrower’s depository account at a financial institution ❑ Evidence that the payments were transferred into a third-party money transfer application account owned by the Borrower ❑ Statement from a government agency (e.g., child support agency) reflecting the Borrower’s name as the recipient and the amounts paid Monthly income amount The documented fixed monthly payment amount

(c) Capital gains requirements The following table contains the requirements for income from capital gains: Capital gains Topic Stable monthly income requirements Eligibility Assets used to support the qualifying income amount and continuance must not be in the form of cryptocurrency. Minimum history of receipt Most recent two years of realized capital gains Continuance Must document continuance at the level used for qualifying for at least the next three years Documentation All of the following: ■ Complete federal individual income tax returns for the most recent two-year period reflecting capital gains income ■ Evidence of sufficient assets after the Note Date to support continuance of the income at the level used for qualifying Calculation of monthly income amount Use a 24-month average

(d) Dividend and interest requirements The following table contains the requirements for dividend and interest income: Dividend and interest Topic Stable monthly income requirements Eligibility Assets used to support the qualifying income amount and continuance must not be in the form of cryptocurrency. Minimum history of receipt Most recent two years Continuance Must document continuance at the level used for qualifying for at least the next three years Documentation One of the following: ■ Complete federal individual income tax returns for the most recent two-year period ■ Year-end asset account statements for the most recent two years evidencing all dividend and interest income for each year for the income producing asset(s) Additionally, document sufficient assets remaining after the Note Date to support three-year continuance of the income at the level used for qualifying. Calculation of monthly income amount Use a 24-month average

(e) Foster-care income requirements The following table contains the requirements for foster-care income: Foster-care income received from a State- or county- sponsored organization Topic Stable monthly income requirements Minimum history of receipt Most recent two years Continuance Must be likely to continue for at least the next three years. The Seller is not required to obtain documentation to verify income continuance as long as the Seller doesn’t have any knowledge, information or documentation that the income is no longer being received or is likely to cease. Documentation requirements Evidence of receipt of foster-care income for the most recent two-year period Calculation of monthly income amount Use a 24-month average

(f) Housing Choice Voucher homeownership program (also referred to as Section 8) requirements The following table contains the requirements for income from Housing Choice Voucher (HCV) homeownership program payments: Housing Choice Voucher homeownership program (also referred to as Section 8) payments Topic Stable monthly income requirements Minimum history of receipt A history of receipt is not required for the income to be considered stable. Continuance Document that the HCV homeownership program assistance term limit has a remaining term of at least three years from the Application Received Date. Documentation Documentation from the public housing agency that issued the homeownership voucher verifying the terms, including the source, benefit type, payment frequency, payment amount and duration of the term limit of at least three years Monthly payment amount The documented fixed monthly payment amount. The payments may not be used to offset the monthly housing payment amount used for qualification.

(g) Housing or parsonage allowance requirements The following table contains the requirements for income from housing or parsonage allowance: Housing or parsonage allowance* Topic Stable monthly income requirements Minimum history of receipt Payments must have been received for the most recent 12 months. Continuance Must be likely to continue for at least the next three years. The Seller is not required to obtain documentation to verify income continuance as long as the Seller doesn’t have any knowledge, information or documentation that the income is no longer being received or is likely to cease. Documentation All of the following: ■ Written verification of employment (VOE), a letter from the employer or paystubs documenting the amount of the housing or parsonage allowance and the terms under which it is paid ■ Evidence of the most recent 12 months’ receipt of the housing or parsonage allowance Monthly income amount The documented fixed monthly payment amount. The housing allowance may not be used to offset the monthly housing payment. *Refer to Section 5303.1(c)(ii) for military housing entitlements. Refer to Section 4408.1(d)(iv)(A) for housing allowance received pursuant to an employee relocation program.

(h) Long-term disability income requirements The following table contains the requirements for long-term disability income: Long-term disability income (e.g., Social Security disability benefits, VA disability compensation, worker’s compensation, private disability insurance) Topic Stable monthly income requirements Existing and established sources of long-term disability income: Minimum history of receipt A history of receipt is not required for the income to be considered stable. Continuance Long-term disability income may or may not have documentable continuance of at least three years from the Application Received Date, depending on the income source. The Seller must make this determination based on factors such as whether the payments are received pursuant to a written agreement, government program, law and/or regulation, as well as the applicable eligibility criteria governing the continued receipt of the income. Long-term disability income may be considered to have a reasonable expectation of continuance without obtaining any additional documentation unless there is a pre-determined insurance and/or benefit expiration date that is less than three years (e.g., stated termination of a private disability insurance policy). Pending or current re-evaluation of medical eligibility for insurance and/or benefit payments is not considered an indication that the insurance and/or benefit payment will not continue. Documentation ■ Document all of the following: ❑ Income type ❑ Source ❑ Payment frequency ❑ Pre-determined payment amount Long-term disability income (e.g., Social Security disability benefits, VA disability compensation, worker’s compensation, private disability insurance) Topic Stable monthly income requirements ❑ Current receipt ■ Acceptable documentation includes one or more of the following: ❑ Benefit verification letter ❑ Award letter ❑ Pay statement ❑ Internal Revenue Service (IRS) Form 1099 ❑ Form W-2 ❑ Bank statement(s) ❑ Other equivalent documentation ■ If the disability policy has a pre-determined expiration date (e.g., certain disability policies provided by employers and private insurers), obtain a copy of the certificate of coverage or other equivalent documentation evidencing the policy term ■ For Social Security disability benefits, the Seller must obtain one of the following: ❑ The Social Security Administration benefit verification letter ❑ IRS Form 1099-SSA for the most recent calendar year ❑ Pages 1 and 2 of the Borrower’s most recent federal individual income tax returns (or pages 1–3 if filing 1040-SR). If the tax returns were filed jointly with an individual who is not a Borrower on the transaction, the Seller must obtain additional documentation supporting the amount of Social Security income used for qualifying. ❑ Evidence of current receipt Long-term disability income (e.g., Social Security disability benefits, VA disability compensation, worker’s compensation, private disability insurance) Topic Stable monthly income requirements ■ Age of documentation requirements as described in Section 5102.4 do not have to be met for verification of income type, source, payment frequency or pre-determined payment amount ■ Age of documentation requirements as described in Section 5102.4 must be met for verification of current receipt Newly established long-term disability income: Eligibility The income must start on or before the first Mortgage payment due date. Exception: Long-term disability income that will start after the first Mortgage payment due date is acceptable for qualifying the Borrower if all of the following apply: ■ The Borrower is currently receiving short-term disability benefits that will subsequently convert to long-term benefits ■ The Borrower is qualified on the lesser amount of either the long-term or short-term disability payments Minimum history of receipt A history of receipt is not required for the income to be considered stable. Continuance Long-term disability income may or may not have documentable continuance of at least three years from the Application Received Date, depending on the income source. The Seller must make this determination based on factors such as whether the payments are received pursuant to a written agreement, government program, law and/or regulation, as well as the applicable eligibility criteria governing the continued receipt of the income. Long-term disability income (e.g., Social Security disability benefits, VA disability compensation, worker’s compensation, private disability insurance) Topic Stable monthly income requirements Long-term disability income may be considered to have a reasonable expectation of continuance without obtaining any additional documentation unless there is a pre-determined insurance and/or benefit expiration date that is less than three years (e.g., stated termination of a private disability insurance policy). Pending or current re-evaluation of medical eligibility for insurance and/or benefit payments is not considered an indication that the insurance and/or benefit payment will not continue. Documentation ■ Document all of the finalized terms of the newly established income: ❑ Income source ❑ Benefit type ❑ Effective start date of income ❑ Payment frequency ❑ Pre-determined payment amount ■ Acceptable documentation includes: ❑ Benefit verification letter ❑ Notice of award letter ❑ Other equivalent documentation from the payor that provides and establishes these terms ■ If the disability policy has a pre-determined expiration date (e.g., certain disability policies provided by employers and private insurers), obtain a copy of the certificate of coverage or other equivalent documentation evidencing the policy term Long-term disability income (e.g., Social Security disability benefits, VA disability compensation, worker’s compensation, private disability insurance) Topic Stable monthly income requirements ■ The documentation must be dated no more than 120 days before the Note Date ■ Verification of current receipt is not required Monthly income amount The pre-determined payment amount Future long-term disability income: Eligibility Long-term disability income that will start after the first Mortgage payment due date is acceptable for qualifying the Borrower only if the Borrower is currently receiving short-term disability benefits that will subsequently convert to long-term benefits. Continuance Long-term disability income may be considered to have a reasonable expectation of continuance without obtaining any additional documentation unless there is a pre-determined insurance and/or benefit expiration date that is less than three years (e.g., stated termination of a private disability insurance policy). Pending or current re-evaluation of medical eligibility for insurance and/or benefit payments is not considered an indication that the insurance and/or benefit payment will not continue. Documentation ■ Document all of the following for both the short-term and long-term payments: ❑ Source ❑ Type Long-term disability income (e.g., Social Security disability benefits, VA disability compensation, worker’s compensation, private disability insurance) Topic Stable monthly income requirements ❑ Amount ❑ Payment frequency ■ Obtain verification of current receipt of the short-term disability payments and verification that the Borrower will continue to receive the payments until the date of conversion to longterm disability ■ The documentation must be dated no more than 120 days prior to the Note Date Monthly income amount The lesser of either the long-term or short-term disability payment amount

(i) Mortgage Credit Certificate (MCC) requirements The following table contains the requirements for income from an MCC: MCC Topic Stable monthly income requirements Minimum history of receipt A history of receipt is not required for the income to be considered stable. Continuance Must be likely to continue for at least the next three years. The Seller is not required to obtain documentation to verify income continuance as long as the Seller doesn’t have any knowledge, information or documentation that the income is no longer being received or is likely to cease. MCC Topic Stable monthly income requirements Documentation The MCC Calculation of monthly income amount ■ Use the (Mortgage amount) x (Note Rate) x (MCC rate %) divided by 12 ■ The amount used as qualifying income must not exceed the maximum Mortgage interest credit permitted by the IRS

(j) Notes receivable requirements The following table contains the requirements for income from notes receivable: Notes receivable Topic Stable monthly income requirements Minimum history of receipt Payments must have been received on a regular monthly basis for the most recent 12 months. Continuance The note must have a remaining term of at least three years from the Application Received Date. Documentation All of the following: ■ A copy of the note evidencing the terms, including the scheduled amount and duration of payments ■ Proof of receipt of payments for the most recent 12 months Notes receivable Topic Stable monthly income requirements Monthly income amount The full scheduled payment amount documented on the note

(k) Public assistance income (e.g., TANF) requirements The following table contains the requirements for public assistance income: Public assistance income (e.g., TANF) Topic Stable monthly income requirements Existing and established public assistance income: Minimum history of receipt A history of receipt is not required for the income to be considered stable. Continuance Public assistance income may or may not have documentable continuance of at least three years from the Application Received Date, depending on the income source. The Seller must make this determination based on factors such as whether the payments are received pursuant to a written agreement, government program, law and/or regulation, as well as the applicable eligibility criteria governing the continued receipt of the income. When public assistance income has a documentable duration (e.g., TANF), the Seller must document duration of benefit eligibility for at least three years from the Application Received Date. Public assistance income (e.g., TANF) Topic Stable monthly income requirements Documentation ■ Document all of the following: ❑ Income source ❑ Benefit type ❑ Payment frequency ❑ Pre-determined payment amount ❑ Duration of benefit eligibility ■ Acceptable documentation includes benefit verification letter or other equivalent documentation from applicable agency. ■ Document current receipt with a copy of the bank statement, benefit verification letter from applicable agency or other equivalent documentation that provides and establishes these terms ■ Age of documentation requirements as described in Section 5102.4 do not have to be met for income source, benefit type, payment frequency, pre-determined payment amount and duration of benefit eligibility ■ Age of documentation requirements as described in Section 5102.4 must be met for verification of current receipt Monthly income amount The documented public assistance benefit amount Newly established public assistance income: Public assistance income (e.g., TANF) Topic Stable monthly income requirements Eligibility The income must start on or before the first Mortgage payment due date. Minimum history of receipt A history of receipt is not required for the income to be considered stable. Continuance Public assistance income may or may not have documentable continuance of at least three years from the Application Received Date, depending on the income source. The Seller must make this determination based on factors such as whether the payments are received pursuant to a written agreement, government program, law and/or regulation, as well as the applicable eligibility criteria governing the continued receipt of the income. When public assistance income has a documentable duration (e.g., TANF), the Seller must document duration of benefit eligibility for at least three years from the Application Received Date. Public assistance income (e.g., TANF) Topic Stable monthly income requirements Documentation ■ Document all of the finalized terms of the newly established income: ❑ Income source ❑ Benefit type ❑ Duration of benefit eligibility ❑ Effective start date of income ❑ Payment frequency ❑ Pre-determined payment amount ■ Acceptable documentation includes benefit verification letter or other equivalent documentation from applicable agency that provides and establishes these terms ■ The documentation must be dated no more than 120 days before the Note Date ■ Verification of current receipt is not required Monthly income amount The documented public assistance benefit amount

(l) Retirement account distributions as income requirements The following table contains the requirements for retirement account distributions as income: Retirement account distributions as income (e.g., 401(k), Individual Retirement Account (IRA)) Topic Stable monthly income requirements Eligibility Distributions from retirement accounts recognized by the IRS (e.g., 401(k), IRA) that are not subject to penalty (e.g., early withdrawal penalty) may be considered stable monthly qualifying income. Assets used to support the qualifying income amount and continuance must not be in the form of cryptocurrency. Minimum history of receipt The history of receipt necessary to justify a stable monthly qualifying income amount may vary due to the multiple variables inherent with distributions from retirement accounts. This may include a range of history from zero to 24 months, depending on the individual circumstances. Factors the Seller must consider when determining the history of receipt necessary to justify a stable monthly qualifying income amount include, but are not limited to, the following: ■ Frequency and regularity of receipt of the distributions ■ Length of time the distributions have been taken and whether they establish a stable pattern of receipt over a given period. Example: Consider whether the distributions are fixed amounts occurring with regular frequency or are fluctuating amounts occurring with or without regular frequency. For fixed amounts occurring with regular frequency, a lesser history of receipt may be needed to determine the amount and stability of the qualifying income than would be needed for fluctuating amounts. For fluctuating amounts, it may be necessary to obtain a longer history of receipt to determine the amount and stability of the qualifying income while taking into consideration whether the overall payments are similar when viewed year over year or with another similar measure, such as quarter over quarter. ■ Rules governing distributions (e.g., IRS rules governing exceptions to early withdrawal penalties and Required Minimum Distributions, employer retirement plan rules and designs Retirement account distributions as income (e.g., 401(k), Individual Retirement Account (IRA)) Topic Stable monthly income requirements governing scheduled distribution terms). Certain rules may provide support for the frequency and regularity of receipt as well as continued receipt, thereby enabling a lesser amount of history to justify a stable monthly qualifying income amount. History of receipt is not required when all of the following apply: ■ Distributions are being taken in accordance with certain IRS rules, such as the Required Minimum Distributions rule (i.e., excise tax penalty applies if distributions are not taken) ■ Evidence of current receipt of the required minimum distribution amount is obtained Continuance Document that the Borrower has sufficient eligible retirement assets remaining in the retirement account(s) to support the amount of qualifying income for at least the next three years. If the retirement account(s) from which the Borrower is currently taking distribution is projected to be depleted within three years, the Borrower’s additional retirement account(s) may be considered when determining continuance of income used for qualifying if the additional retirement accounts in aggregate support the amount of qualifying income for at least three years after the Note Date. The additional retirement accounts used to verify continuance may not be used as a source of funds for closing or reserves, as a current source of income for the Borrower or for the calculation of assets as a basis for repayment of obligations described in Section 5307.1. Documentation All of the following: ■ Most recent retirement account statement(s), documentation from financial institution holding retirement account that verifies regularly scheduled distribution arrangements, IRS Form 1099(s) and/or other equivalent documentation showing income source, type, distribution frequency, distribution amounts and history of receipt (as applicable). Retirement account distributions as income (e.g., 401(k), Individual Retirement Account (IRA)) Topic Stable monthly income requirements Note: If the retirement distributions are not scheduled monthly payments (e.g., annual, semiannual, quarterly), the most recent distribution verified through a copy of the retirement account statement, IRS Form 1099 and/or other equivalent documentation, as applicable, is sufficient in lieu of current receipt. However, verification of receipt of multiple distributions may be necessary to determine frequency of distributions, history of receipt and amount of stable monthly qualifying income. ■ Bank statement(s) or other equivalent documentation evidencing current receipt (as applicable) ■ Evidence of sufficient assets among all retirement accounts used to support the qualifying income amount and continuance ■ Seller’s written analysis used to determine the qualifying income Monthly income amount The amount of the stable monthly distributions established and documented in accordance with the requirements above (m)Retirement income requirements The following table contains the requirements for retirement income: Retirement income (e.g., social security, pension, annuity, other similar benefits; not including retirement account distributions as income) Topic Stable monthly income requirements For existing and established sources of retirement income: Minimum history of receipt A history of receipt is not required for the income to be considered stable. Continuance Retirement income may or may not have documentable continuance of at least three years from the Application Received Date, depending on the income source. The Seller must make this determination based on factors such as whether the payments are received pursuant to a written agreement, government program, law and/or regulation, as well as the applicable eligibility criteria governing the continued receipt of the income. Examples: ■ If the source of retirement income is Social Security retirement benefits, no additional documentation of continuance is required ■ If the source is a retirement annuity from an insurance company, there will generally be a defined term, in which case continuance for at least three years from the Application Received Date must be documented Documentation ■ Document all of the following: ❑ Income type ❑ Source ❑ Payment frequency Retirement income (e.g., social security, pension, annuity, other similar benefits; not including retirement account distributions as income) Topic Stable monthly income requirements ❑ Pre-determined payment amount ❑ Current receipt ■ Acceptable documentation includes one or more of the following: ❑ Benefit verification letter ❑ Award letter ❑ Pay statement ❑ IRS Form 1099 for the most recent calendar year ❑ Bank statement(s) ❑ Other equivalent documentation ■ Age of documentation requirements described in Section 5102.4 do not have to be met for verification of income type, source, payment frequency or pre-determined payment amount ■ Age of documentation requirements described in Section 5102.4 must be met for verification of current receipt. Exception: For pension income, when IRS Form 1099 is used to document current receipt, and verifies income type and source, the age of documentation requirements described in Section 5102.4 do not apply. ■ For Social Security retirement benefits, obtain one of the following: ❑ Social Security Administration benefit verification letter ❑ IRS Form 1099-SSA for the most recent calendar year Retirement income (e.g., social security, pension, annuity, other similar benefits; not including retirement account distributions as income) Topic Stable monthly income requirements ❑ Pages 1 and 2 of the Borrower’s most recent federal individual income tax returns (or pages 1–3 if filing Form 1040-SR). If the tax returns were filed jointly with an individual who is not a Borrower on the transaction, the Seller must obtain additional documentation supporting the amount of Social Security income used for qualifying. ❑ Evidence of current receipt that meets the age of documentation requirements described in Section 5102.4 Monthly income amount The documented fixed monthly payment amount For newly established sources of retirement income: Eligibility The income must start on or before the first Mortgage payment due date. Minimum history of receipt A history of receipt is not required for the income to be considered stable. Continuance Retirement income may or may not have documentable continuance of at least three years from the Application Received Date, depending on the income source. The Seller must make this determination based on factors such as whether the payments are received pursuant to a written agreement, government program, law and/or regulation, as well as the applicable eligibility criteria governing the continued receipt of the income. Examples: Retirement income (e.g., social security, pension, annuity, other similar benefits; not including retirement account distributions as income) Topic Stable monthly income requirements ■ If the source of retirement income is Social Security retirement benefits, no additional documentation of continuance is required ■ If the source is a retirement annuity from an insurance company, there will generally be a defined term in which case continuance for at least three years from the Application Received Date must be documented Documentation ■ Document all of the finalized terms of the newly established income: ❑ Income source ❑ Income type ❑ Effective start date of income ❑ Payment frequency ❑ Pre-determined payment amount ■ Acceptable documentation includes one or more of the following: ❑ Benefit verification letter ❑ Notice of award letter ❑ Other equivalent documentation from the payor that provides and establishes these terms ■ The documentation must be dated no more than 120 days before the Note Date ■ Verification of current receipt is not required Monthly income amount The pre-determined payment amount (n) Royalty payments requirements The following table contains the requirements for income from royalty payments: Royalty payments Topic Stable monthly income requirements For Borrowers who have less than a two-year history: Minimum history of receipt Payments must have been received on a regular basis for the most recent 12 months. Continuance Must document eligibility for payment continuance for at least three years from the Application Received Date Documentation All of the following: ■ Complete federal individual income tax return for the most recent one-year period ■ Royalty contract(s) or lease agreement(s) evidencing the terms including the duration of payment eligibility for at least the next three years Calculation of monthly income amount Use a 12-month average For Borrowers who have a history of two years or more: Royalty payments Topic Stable monthly income requirements Minimum history of receipt Most recent two-years receipt of payments on a regular basis Continuance Must be likely to continue for at least the next three years. The Seller is not required to obtain documentation to verify income continuance as long as the Seller doesn’t have any knowledge, information or documentation that the income is no longer being received or is likely to cease. Documentation Complete federal individual income tax returns for the most recent two-year period Calculation of monthly income amount Use a 24-month average (o) Social Security SSI requirements The following table contains the requirements for Social Security SSI: Social Security SSI Topic Stable monthly income requirements Existing and established SSI benefits: Social Security SSI Topic Stable monthly income requirements Minimum history of receipt A history of receipt is not required for the income to be considered stable. Continuance Social Security SSI may be considered to have a reasonable expectation of continuance unless there is evidence that the benefits will not continue. Pending or current re-evaluation of medical eligibility for benefit payments is not considered an indication that the insurance and/or benefit payment will not continue. Documentation requirements ■ Document all of the following: ❑ Income type ❑ Source, ❑ Payment frequency ❑ Pre-determined payment amount ❑ Current receipt ■ Acceptable documentation includes one or more of the following: ❑ Benefit verification letter ❑ Award letter ❑ Pay statement ❑ IRS Form 1099 ❑ Form W-2 Social Security SSI Topic Stable monthly income requirements ❑ Bank statement(s) ❑ Other equivalent documentation ■ Age of documentation requirements as described in Section 5102.4 do not have to be met for verification of income type, source, payment frequency or pre-determined payment amount ■ Age of documentation requirements as described in Section 5102.4 must be met for verification of current receipt Monthly income amount The documented Social Security SSI benefit amount Newly established Social Security SSI benefits: Eligibility The income must start on or before the first Mortgage payment due date. Minimum history of receipt A history of receipt is not required for the income to be considered stable. Continuance Social Security SSI may be considered to have a reasonable expectation of continuance unless there is evidence that the benefits will not continue. Pending or current re-evaluation of medical eligibility for benefit payments is not considered an indication that the insurance and/or benefit payment will not continue. Social Security SSI Topic Stable monthly income requirements Documentation ■ Document all the finalized terms of the newly established income, including: ❑ Income source ❑ Benefit type ❑ Effective start date of income ❑ Payment frequency ❑ Pre-determined payment amount ■ Acceptable documentation includes one or more of the following: ❑ Benefit verification letter ❑ Notice of award letter ❑ Other equivalent documentation from the payor that provides and establishes these terms ■ The documentation must be dated no more than 120 days before the Note Date ■ Verification of current receipt is not required Monthly income amount The documented Social Security SSI benefit amount (p) Survivor and dependent benefit income requirements The following table contains the requirements for survivor and dependent benefit income: Survivor and dependent benefit income (e.g., Social Security Survivor benefits, Survivors’ VA benefits, other similar benefits) Topic Stable monthly income requirements Existing and established sources of survivor and/or dependent benefit income: Minimum history of receipt A history of receipt is not required for the income to be considered stable. Continuance Survivor and dependent benefit income may or may not have documentable continuance of at least three years from the Application Received Date, depending on the income source. The Seller must make this determination based on factors such as whether the payments are received pursuant to a written agreement, government program, law and/or regulation, as well as the applicable eligibility criteria governing the continued receipt of the income. Documentation ■ Document all of the following: ❑ Income type ❑ Source ❑ Payment frequency ❑ Pre-determined payment ❑ Current receipt ■ Acceptable documentation includes: ❑ Benefit verification letter ❑ Award letter Survivor and dependent benefit income (e.g., Social Security Survivor benefits, Survivors’ VA benefits, other similar benefits) Topic Stable monthly income requirements ❑ IRS Form 1099 ❑ Bank statement(s) ❑ Other equivalent documentation ■ Age of documentation requirements as described in Section 5102.4 do not have to be met for verification of income type, source, payment frequency or pre-determined payment amount ■ Age of documentation requirements as described in Section 5102.4 must be met for verification of current receipt Monthly income amount The documented fixed monthly payment amount Newly established sources of survivor and/or dependent benefit income: Eligibility The income must start on or before the first Mortgage payment due date. History of receipt A history of receipt is not required for the income to be considered stable. Continuance Survivor and dependent benefit income may or may not have documentable continuance of at least three years from the Application Received Date, depending on the income source. The Seller must make this determination based on factors such as whether the payments are received pursuant to a written agreement, government program, law and/or regulation, as well as the applicable eligibility criteria governing the continued receipt of the income. Survivor and dependent benefit income (e.g., Social Security Survivor benefits, Survivors’ VA benefits, other similar benefits) Topic Stable monthly income requirements Documentation ■ Document all the finalized terms of the newly established income, including: ❑ Income source ❑ Benefit type ❑ Effective start date of income ❑ Payment frequency ❑ Pre-determined payment amount ■ Acceptable documentation includes: ❑ Benefit verification letter ❑ Notice of award letter ❑ Other equivalent documentation from the payor that provides and establishes these terms ■ The documentation must be dated no more than 120 days before the Note Date ■ Verification of current receipt is not required Monthly income amount The pre-determined payment amount (q) Trust income requirements The following table contains the requirements for trust income: Trust income Topic Stable monthly income requirements For trust income based on historical fluctuating payments from a trust asset: Eligibility Trust income must be generated by a financial asset. Assets used to support the qualifying income amount and continuance must not be in the form of cryptocurrency. Minimum history of receipt Most recent two years when the income is based on historical fluctuating payments from a trust asset (e.g., dividends and interest) Continuance Must document continuance at the level used for qualifying for at least the next three years Documentation All of the following: ■ Fully executed trust agreement outlining payment terms ■ Complete federal individual income tax returns for the most recent two-year period verifying receipt of income for the most recent two years ■ Evidence sufficient assets remain after the Note Date to support the qualifying income (e.g., bank statements, letter from trustee). When the Borrower is the trustee, a letter from the trustee is not acceptable documentation. Calculation Use a 24-month average Trust income Topic Stable monthly income requirements For trust income based on a pre-determined fixed payment amount: Eligibility Trust income must be generated by a financial asset. Assets used to support the qualifying income amount and continuance must not be in the form of cryptocurrency. Minimum history of receipt Most recent one year when the trust specifies pre-determined fixed payment amounts occurring at regular intervals for a duration of at least three years Continuance Must document duration of the fixed payment amount for at least three years from the Application Received Date Documentation All of the following: ■ Fully executed trust agreement specifying fixed payment amount occurring at set intervals (e.g., monthly, quarterly) and duration of payments ■ Bank statements or equivalent documentation verifying receipt payments for the most recent one year ■ Evidence sufficient assets remain after the Note Date to support the qualifying income (e.g., bank statements, letter from trustee). When the Borrower is the trustee, a letter from the trustee is not acceptable documentation. Monthly income amount The fixed payment amount documented in the trust agreement (r) Tax-exempt income requirements When income is tax exempt, the Seller may adjust the monthly income amount for qualifying purposes by “grossing up” the verified monthly amount, in accordance with the following requirements in the table below. The following table contains stable monthly income and documentation requirements for tax-exempt income: Tax-exempt income Topic Stable monthly income requirements Minimum history of receipt No minimum history requirement for the tax-exempt status Continuance Must be likely to continue to remain tax exempt. The Seller must not have any knowledge, information or documentation that the income will not remain tax exempt. Documentation Complete federal individual income tax return for the most recent one-year period or other documentation evidencing that the income, or a portion of the income, is tax exempt. Exceptions: Evidence the income is tax exempt is not required to be documented for: ■ Child support income ■ Housing Choice Voucher Homeownership Program (also referred to as Section 8) ■ 15% of Social Security income (i.e., retirement income, disability benefits, survivor benefits and SSI) Tax-exempt income Topic Stable monthly income requirements Calculation The Seller may increase (i.e., “gross-up”) the Borrower’s income for qualification by adding to the tax-exempt income (or the tax-exempt portion of the income): ■ 25% of the tax-exempt income (or the tax-exempt portion of the income), or ■ The tax rate from the current federal and State income tax withholding tables of the taxexempt income (or the tax-exempt portion of the income) Example 1: The Borrower’s monthly Social Security income is $1,000 and 15% (i.e., $150) of the income is tax-exempt: ■ $150 x 25% = $37.50 ■ $1,000 + $37.50 = $1,037.50 (total qualifying Social Security income) Example 2: The Borrower’s child support income is $2,000, and the tax rate from the current federal and State income tax withholding tables is 30%: ■ $2,000 x 30% = $600 ■ $2,000 + $600 = $2,600 (total qualifying child support income) (s) Additional requirements for income from a foreign source (i.e., non-employment/non-self-employment income) The following requirements apply to other income (i.e., non-employment/non-self-employment) from a foreign source in addition to the requirements for the applicable income type in this chapter: Income from a foreign source (i.e., non-employment/non-self-employment income) Topic Stable monthly income requirements Eligibility Must be reported on the Borrower’s most recent U.S. federal individual income tax return Minimum history of receipt Refer to the income type(s) listed in this chapter for the requirements applicable to the income type received from the foreign source. Continuance Refer to the income type(s) listed in this chapter for the requirements applicable to the income type received from the foreign source. Documentation All of the following: ■ The Borrower’s most recent complete U.S. federal individual income tax return ■ Documentation for the applicable income type meeting the requirements of this chapter Monthly income amount Refer to the income type(s) listed in this chapter for the requirements applicable to the income type received from the foreign source.

This section contains: ■ Requirements applicable to all other income types ■ Alimony, child support or separate maintenance payments requirements ■ Capital gains requirements ■ Dividend and interest requirements ■ Foster-care income requirements ■ Housing Choice Voucher (HCV) homeownership program (also referred to as Section 8) requirements ■ Housing or parsonage allowance requirements ■ Long-term disability income requirements ■ Mortgage Credit Certificates requirements ■ Notes receivable requirements ■ Public assistance income (e.g., Temporary Assistance for Needy Families (TANF)) requirements ■ Retirement account distributions as income requirements ■ Retirement income requirements ■ Royalty payments requirements ■ Social Security Supplemental Security Income (SSI) requirements ■ Survivor and dependent benefit income requirements ■ Trust income requirements ■ Tax-exempt income requirements ■ Additional requirements for income from a foreign source (i.e., non-employment/non-self-employment income)

(a) Requirements applicable to all other income types The Seller must evaluate the stability, consistency and continued receipt of all other income (i.e., non-employment/non-selfemployment income) used for qualifying, including income types not specifically addressed in this section. The Seller must: ■ Determine whether documentable continuance is applicable ■ Consider factors that include, but are not limited to: ❑ Whether the payments are received pursuant to a written agreement, court decree, government program, law and/or regulation ❑ The length of time the payments have been received ❑ The regularity of receipt of the income ❑ The consistency of the amount of income ❑ The availability of procedures to compel payment ❑ Whether full or partial payments have been made ❑ The age of each child for which support and/or benefit payments are made (if applicable) ❑ Applicable eligibility criteria governing the continued receipt of the income For general requirements with respect to income history, stability and continuance, refer to Section 5301.1.

(b) Alimony, child support or separate maintenance payments requirements The following table contains the requirements for income from alimony, child support and separate maintenance payments: Alimony, child support or separate maintenance payments Topic Stable monthly income requirements Minimum history of receipt Payments in the full amount must have been consistently received for the most recent six months. The income must not be considered for qualifying if any of the following apply: ■ The payor has been obligated to make payments for less than six months ■ The payments are not for the full amount ■ The payments are not received on a consistent basis Continuance Document the payor is obligated to make payments to the Borrower for at least three years from the Application Received Date. Alimony, child support or separate maintenance payments Topic Stable monthly income requirements Documentation ■ Documentation of the payor’s obligation(s) for the previous six months, including the amount and the duration of the obligation, with one or more of the following: ❑ Signed court order ❑ Final divorce decree ❑ Legally binding separation agreement ❑ Legally binding child support agreement ❑ Other legally binding documentation ■ For child support income, evidence of the ages of the children for which child support is received ■ Receipt of the alimony, child support and/or separate maintenance payments for the most recent six months. Documentation of receipt must include one or more of the following: ❑ Evidence that the payments were cashed or deposited into the Borrower’s depository account at a financial institution ❑ Evidence that the payments were transferred into a third-party money transfer application account owned by the Borrower ❑ Statement from a government agency (e.g., child support agency) reflecting the Borrower’s name as the recipient and the amounts paid Monthly income amount The documented fixed monthly payment amount

(c) Capital gains requirements The following table contains the requirements for income from capital gains: Capital gains Topic Stable monthly income requirements Eligibility Assets used to support the qualifying income amount and continuance must not be in the form of cryptocurrency. Minimum history of receipt Most recent two years of realized capital gains Continuance Must document continuance at the level used for qualifying for at least the next three years Documentation All of the following: ■ Complete federal individual income tax returns for the most recent two-year period reflecting capital gains income ■ Evidence of sufficient assets after the Note Date to support continuance of the income at the level used for qualifying Calculation of monthly income amount Use a 24-month average

(d) Dividend and interest requirements The following table contains the requirements for dividend and interest income: Dividend and interest Topic Stable monthly income requirements Eligibility Assets used to support the qualifying income amount and continuance must not be in the form of cryptocurrency. Minimum history of receipt Most recent two years Continuance Must document continuance at the level used for qualifying for at least the next three years Documentation One of the following: ■ Complete federal individual income tax returns for the most recent two-year period ■ Year-end asset account statements for the most recent two years evidencing all dividend and interest income for each year for the income producing asset(s) Additionally, document sufficient assets remaining after the Note Date to support three-year continuance of the income at the level used for qualifying. Calculation of monthly income amount Use a 24-month average

(e) Foster-care income requirements The following table contains the requirements for foster-care income: Foster-care income received from a State- or county- sponsored organization Topic Stable monthly income requirements Minimum history of receipt Most recent two years Continuance Must be likely to continue for at least the next three years. The Seller is not required to obtain documentation to verify income continuance as long as the Seller doesn’t have any knowledge, information or documentation that the income is no longer being received or is likely to cease. Documentation requirements Evidence of receipt of foster-care income for the most recent two-year period Calculation of monthly income amount Use a 24-month average

(f) Housing Choice Voucher homeownership program (also referred to as Section 8) requirements The following table contains the requirements for income from Housing Choice Voucher (HCV) homeownership program payments: Housing Choice Voucher homeownership program (also referred to as Section 8) payments Topic Stable monthly income requirements Minimum history of receipt A history of receipt is not required for the income to be considered stable. Continuance Document that the HCV homeownership program assistance term limit has a remaining term of at least three years from the Application Received Date. Documentation Documentation from the public housing agency that issued the homeownership voucher verifying the terms, including the source, benefit type, payment frequency, payment amount and duration of the term limit of at least three years Monthly payment amount The documented fixed monthly payment amount. The payments may not be used to offset the monthly housing payment amount used for qualification.

(g) Housing or parsonage allowance requirements The following table contains the requirements for income from housing or parsonage allowance: Housing or parsonage allowance* Topic Stable monthly income requirements Minimum history of receipt Payments must have been received for the most recent 12 months. Continuance Must be likely to continue for at least the next three years. The Seller is not required to obtain documentation to verify income continuance as long as the Seller doesn’t have any knowledge, information or documentation that the income is no longer being received or is likely to cease. Documentation All of the following: ■ Written verification of employment (VOE), a letter from the employer or paystubs documenting the amount of the housing or parsonage allowance and the terms under which it is paid ■ Evidence of the most recent 12 months’ receipt of the housing or parsonage allowance Monthly income amount The documented fixed monthly payment amount. The housing allowance may not be used to offset the monthly housing payment. *Refer to Section 5303.1(c)(ii) for military housing entitlements. Refer to Section 4408.1(d)(iv)(A) for housing allowance received pursuant to an employee relocation program.

(h) Long-term disability income requirements The following table contains the requirements for long-term disability income: Long-term disability income (e.g., Social Security disability benefits, VA disability compensation, worker’s compensation, private disability insurance) Topic Stable monthly income requirements Existing and established sources of long-term disability income: Minimum history of receipt A history of receipt is not required for the income to be considered stable. Continuance Long-term disability income may or may not have documentable continuance of at least three years from the Application Received Date, depending on the income source. The Seller must make this determination based on factors such as whether the payments are received pursuant to a written agreement, government program, law and/or regulation, as well as the applicable eligibility criteria governing the continued receipt of the income. Long-term disability income may be considered to have a reasonable expectation of continuance without obtaining any additional documentation unless there is a pre-determined insurance and/or benefit expiration date that is less than three years (e.g., stated termination of a private disability insurance policy). Pending or current re-evaluation of medical eligibility for insurance and/or benefit payments is not considered an indication that the insurance and/or benefit payment will not continue. Documentation ■ Document all of the following: ❑ Income type ❑ Source ❑ Payment frequency ❑ Pre-determined payment amount Long-term disability income (e.g., Social Security disability benefits, VA disability compensation, worker’s compensation, private disability insurance) Topic Stable monthly income requirements ❑ Current receipt ■ Acceptable documentation includes one or more of the following: ❑ Benefit verification letter ❑ Award letter ❑ Pay statement ❑ Internal Revenue Service (IRS) Form 1099 ❑ Form W-2 ❑ Bank statement(s) ❑ Other equivalent documentation ■ If the disability policy has a pre-determined expiration date (e.g., certain disability policies provided by employers and private insurers), obtain a copy of the certificate of coverage or other equivalent documentation evidencing the policy term ■ For Social Security disability benefits, the Seller must obtain one of the following: ❑ The Social Security Administration benefit verification letter ❑ IRS Form 1099-SSA for the most recent calendar year ❑ Pages 1 and 2 of the Borrower’s most recent federal individual income tax returns (or pages 1–3 if filing 1040-SR). If the tax returns were filed jointly with an individual who is not a Borrower on the transaction, the Seller must obtain additional documentation supporting the amount of Social Security income used for qualifying. ❑ Evidence of current receipt Long-term disability income (e.g., Social Security disability benefits, VA disability compensation, worker’s compensation, private disability insurance) Topic Stable monthly income requirements ■ Age of documentation requirements as described in Section 5102.4 do not have to be met for verification of income type, source, payment frequency or pre-determined payment amount ■ Age of documentation requirements as described in Section 5102.4 must be met for verification of current receipt Newly established long-term disability income: Eligibility The income must start on or before the first Mortgage payment due date. Exception: Long-term disability income that will start after the first Mortgage payment due date is acceptable for qualifying the Borrower if all of the following apply: ■ The Borrower is currently receiving short-term disability benefits that will subsequently convert to long-term benefits ■ The Borrower is qualified on the lesser amount of either the long-term or short-term disability payments Minimum history of receipt A history of receipt is not required for the income to be considered stable. Continuance Long-term disability income may or may not have documentable continuance of at least three years from the Application Received Date, depending on the income source. The Seller must make this determination based on factors such as whether the payments are received pursuant to a written agreement, government program, law and/or regulation, as well as the applicable eligibility criteria governing the continued receipt of the income. Long-term disability income (e.g., Social Security disability benefits, VA disability compensation, worker’s compensation, private disability insurance) Topic Stable monthly income requirements Long-term disability income may be considered to have a reasonable expectation of continuance without obtaining any additional documentation unless there is a pre-determined insurance and/or benefit expiration date that is less than three years (e.g., stated termination of a private disability insurance policy). Pending or current re-evaluation of medical eligibility for insurance and/or benefit payments is not considered an indication that the insurance and/or benefit payment will not continue. Documentation ■ Document all of the finalized terms of the newly established income: ❑ Income source ❑ Benefit type ❑ Effective start date of income ❑ Payment frequency ❑ Pre-determined payment amount ■ Acceptable documentation includes: ❑ Benefit verification letter ❑ Notice of award letter ❑ Other equivalent documentation from the payor that provides and establishes these terms ■ If the disability policy has a pre-determined expiration date (e.g., certain disability policies provided by employers and private insurers), obtain a copy of the certificate of coverage or other equivalent documentation evidencing the policy term Long-term disability income (e.g., Social Security disability benefits, VA disability compensation, worker’s compensation, private disability insurance) Topic Stable monthly income requirements ■ The documentation must be dated no more than 120 days before the Note Date ■ Verification of current receipt is not required Monthly income amount The pre-determined payment amount Future long-term disability income: Eligibility Long-term disability income that will start after the first Mortgage payment due date is acceptable for qualifying the Borrower only if the Borrower is currently receiving short-term disability benefits that will subsequently convert to long-term benefits. Continuance Long-term disability income may be considered to have a reasonable expectation of continuance without obtaining any additional documentation unless there is a pre-determined insurance and/or benefit expiration date that is less than three years (e.g., stated termination of a private disability insurance policy). Pending or current re-evaluation of medical eligibility for insurance and/or benefit payments is not considered an indication that the insurance and/or benefit payment will not continue. Documentation ■ Document all of the following for both the short-term and long-term payments: ❑ Source ❑ Type Long-term disability income (e.g., Social Security disability benefits, VA disability compensation, worker’s compensation, private disability insurance) Topic Stable monthly income requirements ❑ Amount ❑ Payment frequency ■ Obtain verification of current receipt of the short-term disability payments and verification that the Borrower will continue to receive the payments until the date of conversion to longterm disability ■ The documentation must be dated no more than 120 days prior to the Note Date Monthly income amount The lesser of either the long-term or short-term disability payment amount

(i) Mortgage Credit Certificate (MCC) requirements The following table contains the requirements for income from an MCC: MCC Topic Stable monthly income requirements Minimum history of receipt A history of receipt is not required for the income to be considered stable. Continuance Must be likely to continue for at least the next three years. The Seller is not required to obtain documentation to verify income continuance as long as the Seller doesn’t have any knowledge, information or documentation that the income is no longer being received or is likely to cease. MCC Topic Stable monthly income requirements Documentation The MCC Calculation of monthly income amount ■ Use the (Mortgage amount) x (Note Rate) x (MCC rate %) divided by 12 ■ The amount used as qualifying income must not exceed the maximum Mortgage interest credit permitted by the IRS

(j) Notes receivable requirements The following table contains the requirements for income from notes receivable: Notes receivable Topic Stable monthly income requirements Minimum history of receipt Payments must have been received on a regular monthly basis for the most recent 12 months. Continuance The note must have a remaining term of at least three years from the Application Received Date. Documentation All of the following: ■ A copy of the note evidencing the terms, including the scheduled amount and duration of payments ■ Proof of receipt of payments for the most recent 12 months Notes receivable Topic Stable monthly income requirements Monthly income amount The full scheduled payment amount documented on the note

(k) Public assistance income (e.g., TANF) requirements The following table contains the requirements for public assistance income: Public assistance income (e.g., TANF) Topic Stable monthly income requirements Existing and established public assistance income: Minimum history of receipt A history of receipt is not required for the income to be considered stable. Continuance Public assistance income may or may not have documentable continuance of at least three years from the Application Received Date, depending on the income source. The Seller must make this determination based on factors such as whether the payments are received pursuant to a written agreement, government program, law and/or regulation, as well as the applicable eligibility criteria governing the continued receipt of the income. When public assistance income has a documentable duration (e.g., TANF), the Seller must document duration of benefit eligibility for at least three years from the Application Received Date. Public assistance income (e.g., TANF) Topic Stable monthly income requirements Documentation ■ Document all of the following: ❑ Income source ❑ Benefit type ❑ Payment frequency ❑ Pre-determined payment amount ❑ Duration of benefit eligibility ■ Acceptable documentation includes benefit verification letter or other equivalent documentation from applicable agency. ■ Document current receipt with a copy of the bank statement, benefit verification letter from applicable agency or other equivalent documentation that provides and establishes these terms ■ Age of documentation requirements as described in Section 5102.4 do not have to be met for income source, benefit type, payment frequency, pre-determined payment amount and duration of benefit eligibility ■ Age of documentation requirements as described in Section 5102.4 must be met for verification of current receipt Monthly income amount The documented public assistance benefit amount Newly established public assistance income: Public assistance income (e.g., TANF) Topic Stable monthly income requirements Eligibility The income must start on or before the first Mortgage payment due date. Minimum history of receipt A history of receipt is not required for the income to be considered stable. Continuance Public assistance income may or may not have documentable continuance of at least three years from the Application Received Date, depending on the income source. The Seller must make this determination based on factors such as whether the payments are received pursuant to a written agreement, government program, law and/or regulation, as well as the applicable eligibility criteria governing the continued receipt of the income. When public assistance income has a documentable duration (e.g., TANF), the Seller must document duration of benefit eligibility for at least three years from the Application Received Date. Public assistance income (e.g., TANF) Topic Stable monthly income requirements Documentation ■ Document all of the finalized terms of the newly established income: ❑ Income source ❑ Benefit type ❑ Duration of benefit eligibility ❑ Effective start date of income ❑ Payment frequency ❑ Pre-determined payment amount ■ Acceptable documentation includes benefit verification letter or other equivalent documentation from applicable agency that provides and establishes these terms ■ The documentation must be dated no more than 120 days before the Note Date ■ Verification of current receipt is not required Monthly income amount The documented public assistance benefit amount

(l) Retirement account distributions as income requirements The following table contains the requirements for retirement account distributions as income: Retirement account distributions as income (e.g., 401(k), Individual Retirement Account (IRA)) Topic Stable monthly income requirements Eligibility Distributions from retirement accounts recognized by the IRS (e.g., 401(k), IRA) that are not subject to penalty (e.g., early withdrawal penalty) may be considered stable monthly qualifying income. Assets used to support the qualifying income amount and continuance must not be in the form of cryptocurrency. Minimum history of receipt The history of receipt necessary to justify a stable monthly qualifying income amount may vary due to the multiple variables inherent with distributions from retirement accounts. This may include a range of history from zero to 24 months, depending on the individual circumstances. Factors the Seller must consider when determining the history of receipt necessary to justify a stable monthly qualifying income amount include, but are not limited to, the following: ■ Frequency and regularity of receipt of the distributions ■ Length of time the distributions have been taken and whether they establish a stable pattern of receipt over a given period. Example: Consider whether the distributions are fixed amounts occurring with regular frequency or are fluctuating amounts occurring with or without regular frequency. For fixed amounts occurring with regular frequency, a lesser history of receipt may be needed to determine the amount and stability of the qualifying income than would be needed for fluctuating amounts. For fluctuating amounts, it may be necessary to obtain a longer history of receipt to determine the amount and stability of the qualifying income while taking into consideration whether the overall payments are similar when viewed year over year or with another similar measure, such as quarter over quarter. ■ Rules governing distributions (e.g., IRS rules governing exceptions to early withdrawal penalties and Required Minimum Distributions, employer retirement plan rules and designs Retirement account distributions as income (e.g., 401(k), Individual Retirement Account (IRA)) Topic Stable monthly income requirements governing scheduled distribution terms). Certain rules may provide support for the frequency and regularity of receipt as well as continued receipt, thereby enabling a lesser amount of history to justify a stable monthly qualifying income amount. History of receipt is not required when all of the following apply: ■ Distributions are being taken in accordance with certain IRS rules, such as the Required Minimum Distributions rule (i.e., excise tax penalty applies if distributions are not taken) ■ Evidence of current receipt of the required minimum distribution amount is obtained Continuance Document that the Borrower has sufficient eligible retirement assets remaining in the retirement account(s) to support the amount of qualifying income for at least the next three years. If the retirement account(s) from which the Borrower is currently taking distribution is projected to be depleted within three years, the Borrower’s additional retirement account(s) may be considered when determining continuance of income used for qualifying if the additional retirement accounts in aggregate support the amount of qualifying income for at least three years after the Note Date. The additional retirement accounts used to verify continuance may not be used as a source of funds for closing or reserves, a current source of income or accumulated assets as income described in Section 5307.1 for the Borrower. Documentation All of the following: ■ Most recent retirement account statement(s), documentation from financial institution holding retirement account that verifies regularly scheduled distribution arrangements, IRS Form 1099(s) and/or other equivalent documentation showing income source, type, distribution frequency, distribution amounts and history of receipt (as applicable). Retirement account distributions as income (e.g., 401(k), Individual Retirement Account (IRA)) Topic Stable monthly income requirements Note: If the retirement distributions are not scheduled monthly payments (e.g., annual, semiannual, quarterly), the most recent distribution verified through a copy of the retirement account statement, IRS Form 1099 and/or other equivalent documentation, as applicable, is sufficient in lieu of current receipt. However, verification of receipt of multiple distributions may be necessary to determine frequency of distributions, history of receipt and amount of stable monthly qualifying income. ■ Bank statement(s) or other equivalent documentation evidencing current receipt (as applicable) ■ Evidence of sufficient assets among all retirement accounts used to support the qualifying income amount and continuance ■ Seller’s written analysis used to determine the qualifying income Monthly income amount The amount of the stable monthly distributions established and documented in accordance with the requirements above (m)Retirement income requirements The following table contains the requirements for retirement income: Retirement income (e.g., social security, pension, annuity, other similar benefits; not including retirement account distributions as income) Topic Stable monthly income requirements For existing and established sources of retirement income: Minimum history of receipt A history of receipt is not required for the income to be considered stable. Continuance Retirement income may or may not have documentable continuance of at least three years from the Application Received Date, depending on the income source. The Seller must make this determination based on factors such as whether the payments are received pursuant to a written agreement, government program, law and/or regulation, as well as the applicable eligibility criteria governing the continued receipt of the income. Examples: ■ If the source of retirement income is Social Security retirement benefits, no additional documentation of continuance is required ■ If the source is a retirement annuity from an insurance company, there will generally be a defined term, in which case continuance for at least three years from the Application Received Date must be documented Documentation ■ Document all of the following: ❑ Income type ❑ Source ❑ Payment frequency Retirement income (e.g., social security, pension, annuity, other similar benefits; not including retirement account distributions as income) Topic Stable monthly income requirements ❑ Pre-determined payment amount ❑ Current receipt ■ Acceptable documentation includes one or more of the following: ❑ Benefit verification letter ❑ Award letter ❑ Pay statement ❑ IRS Form 1099 for the most recent calendar year ❑ Bank statement(s) ❑ Other equivalent documentation ■ Age of documentation requirements described in Section 5102.4 do not have to be met for verification of income type, source, payment frequency or pre-determined payment amount ■ Age of documentation requirements described in Section 5102.4 must be met for verification of current receipt. Exception: For pension income, when IRS Form 1099 is used to document current receipt, and verifies income type and source, the age of documentation requirements described in Section 5102.4 do not apply. ■ For Social Security retirement benefits, obtain one of the following: ❑ Social Security Administration benefit verification letter ❑ IRS Form 1099-SSA for the most recent calendar year Retirement income (e.g., social security, pension, annuity, other similar benefits; not including retirement account distributions as income) Topic Stable monthly income requirements ❑ Pages 1 and 2 of the Borrower’s most recent federal individual income tax returns (or pages 1–3 if filing Form 1040-SR). If the tax returns were filed jointly with an individual who is not a Borrower on the transaction, the Seller must obtain additional documentation supporting the amount of Social Security income used for qualifying. ❑ Evidence of current receipt that meets the age of documentation requirements described in Section 5102.4 Monthly income amount The documented fixed monthly payment amount For newly established sources of retirement income: Eligibility The income must start on or before the first Mortgage payment due date. Minimum history of receipt A history of receipt is not required for the income to be considered stable. Continuance Retirement income may or may not have documentable continuance of at least three years from the Application Received Date, depending on the income source. The Seller must make this determination based on factors such as whether the payments are received pursuant to a written agreement, government program, law and/or regulation, as well as the applicable eligibility criteria governing the continued receipt of the income. Examples: Retirement income (e.g., social security, pension, annuity, other similar benefits; not including retirement account distributions as income) Topic Stable monthly income requirements ■ If the source of retirement income is Social Security retirement benefits, no additional documentation of continuance is required ■ If the source is a retirement annuity from an insurance company, there will generally be a defined term in which case continuance for at least three years from the Application Received Date must be documented Documentation ■ Document all of the finalized terms of the newly established income: ❑ Income source ❑ Income type ❑ Effective start date of income ❑ Payment frequency ❑ Pre-determined payment amount ■ Acceptable documentation includes one or more of the following: ❑ Benefit verification letter ❑ Notice of award letter ❑ Other equivalent documentation from the payor that provides and establishes these terms ■ The documentation must be dated no more than 120 days before the Note Date ■ Verification of current receipt is not required Monthly income amount The pre-determined payment amount (n) Royalty payments requirements The following table contains the requirements for income from royalty payments: Royalty payments Topic Stable monthly income requirements For Borrowers who have less than a two-year history: Minimum history of receipt Payments must have been received on a regular basis for the most recent 12 months. Continuance Must document eligibility for payment continuance for at least three years from the Application Received Date Documentation All of the following: ■ Complete federal individual income tax return for the most recent one-year period ■ Royalty contract(s) or lease agreement(s) evidencing the terms including the duration of payment eligibility for at least the next three years Calculation of monthly income amount Use a 12-month average For Borrowers who have a history of two years or more: Royalty payments Topic Stable monthly income requirements Minimum history of receipt Most recent two-years receipt of payments on a regular basis Continuance Must be likely to continue for at least the next three years. The Seller is not required to obtain documentation to verify income continuance as long as the Seller doesn’t have any knowledge, information or documentation that the income is no longer being received or is likely to cease. Documentation Complete federal individual income tax returns for the most recent two-year period Calculation of monthly income amount Use a 24-month average (o) Social Security SSI requirements The following table contains the requirements for Social Security SSI: Social Security SSI Topic Stable monthly income requirements Existing and established SSI benefits: Social Security SSI Topic Stable monthly income requirements Minimum history of receipt A history of receipt is not required for the income to be considered stable. Continuance Social Security SSI may be considered to have a reasonable expectation of continuance unless there is evidence that the benefits will not continue. Pending or current re-evaluation of medical eligibility for benefit payments is not considered an indication that the insurance and/or benefit payment will not continue. Documentation requirements ■ Document all of the following: ❑ Income type ❑ Source, ❑ Payment frequency ❑ Pre-determined payment amount ❑ Current receipt ■ Acceptable documentation includes one or more of the following: ❑ Benefit verification letter ❑ Award letter ❑ Pay statement ❑ IRS Form 1099 ❑ Form W-2 Social Security SSI Topic Stable monthly income requirements ❑ Bank statement(s) ❑ Other equivalent documentation ■ Age of documentation requirements as described in Section 5102.4 do not have to be met for verification of income type, source, payment frequency or pre-determined payment amount ■ Age of documentation requirements as described in Section 5102.4 must be met for verification of current receipt Monthly income amount The documented Social Security SSI benefit amount Newly established Social Security SSI benefits: Eligibility The income must start on or before the first Mortgage payment due date. Minimum history of receipt A history of receipt is not required for the income to be considered stable. Continuance Social Security SSI may be considered to have a reasonable expectation of continuance unless there is evidence that the benefits will not continue. Pending or current re-evaluation of medical eligibility for benefit payments is not considered an indication that the insurance and/or benefit payment will not continue. Social Security SSI Topic Stable monthly income requirements Documentation ■ Document all the finalized terms of the newly established income, including: ❑ Income source ❑ Benefit type ❑ Effective start date of income ❑ Payment frequency ❑ Pre-determined payment amount ■ Acceptable documentation includes one or more of the following: ❑ Benefit verification letter ❑ Notice of award letter ❑ Other equivalent documentation from the payor that provides and establishes these terms ■ The documentation must be dated no more than 120 days before the Note Date ■ Verification of current receipt is not required Monthly income amount The documented Social Security SSI benefit amount (p) Survivor and dependent benefit income requirements The following table contains the requirements for survivor and dependent benefit income: Survivor and dependent benefit income (e.g., Social Security Survivor benefits, Survivors’ VA benefits, other similar benefits) Topic Stable monthly income requirements Existing and established sources of survivor and/or dependent benefit income: Minimum history of receipt A history of receipt is not required for the income to be considered stable. Continuance Survivor and dependent benefit income may or may not have documentable continuance of at least three years from the Application Received Date, depending on the income source. The Seller must make this determination based on factors such as whether the payments are received pursuant to a written agreement, government program, law and/or regulation, as well as the applicable eligibility criteria governing the continued receipt of the income. Documentation ■ Document all of the following: ❑ Income type ❑ Source ❑ Payment frequency ❑ Pre-determined payment ❑ Current receipt ■ Acceptable documentation includes: ❑ Benefit verification letter ❑ Award letter Survivor and dependent benefit income (e.g., Social Security Survivor benefits, Survivors’ VA benefits, other similar benefits) Topic Stable monthly income requirements ❑ IRS Form 1099 ❑ Bank statement(s) ❑ Other equivalent documentation ■ Age of documentation requirements as described in Section 5102.4 do not have to be met for verification of income type, source, payment frequency or pre-determined payment amount ■ Age of documentation requirements as described in Section 5102.4 must be met for verification of current receipt Monthly income amount The documented fixed monthly payment amount Newly established sources of survivor and/or dependent benefit income: Eligibility The income must start on or before the first Mortgage payment due date. History of receipt A history of receipt is not required for the income to be considered stable. Continuance Survivor and dependent benefit income may or may not have documentable continuance of at least three years from the Application Received Date, depending on the income source. The Seller must make this determination based on factors such as whether the payments are received pursuant to a written agreement, government program, law and/or regulation, as well as the applicable eligibility criteria governing the continued receipt of the income. Survivor and dependent benefit income (e.g., Social Security Survivor benefits, Survivors’ VA benefits, other similar benefits) Topic Stable monthly income requirements Documentation ■ Document all the finalized terms of the newly established income, including: ❑ Income source ❑ Benefit type ❑ Effective start date of income ❑ Payment frequency ❑ Pre-determined payment amount ■ Acceptable documentation includes: ❑ Benefit verification letter ❑ Notice of award letter ❑ Other equivalent documentation from the payor that provides and establishes these terms ■ The documentation must be dated no more than 120 days before the Note Date ■ Verification of current receipt is not required Monthly income amount The pre-determined payment amount (q) Trust income requirements The following table contains the requirements for trust income: Trust income Topic Stable monthly income requirements For trust income based on historical fluctuating payments from a trust asset: Eligibility Trust income must be generated by a financial asset. Assets used to support the qualifying income amount and continuance must not be in the form of cryptocurrency. Minimum history of receipt Most recent two years when the income is based on historical fluctuating payments from a trust asset (e.g., dividends and interest) Continuance Must document continuance at the level used for qualifying for at least the next three years Documentation All of the following: ■ Fully executed trust agreement outlining payment terms ■ Complete federal individual income tax returns for the most recent two-year period verifying receipt of income for the most recent two years ■ Evidence sufficient assets remain after the Note Date to support the qualifying income (e.g., bank statements, letter from trustee). When the Borrower is the trustee, a letter from the trustee is not acceptable documentation. Calculation Use a 24-month average Trust income Topic Stable monthly income requirements For trust income based on a pre-determined fixed payment amount: Eligibility Trust income must be generated by a financial asset. Assets used to support the qualifying income amount and continuance must not be in the form of cryptocurrency. Minimum history of receipt Most recent one year when the trust specifies pre-determined fixed payment amounts occurring at regular intervals for a duration of at least three years Continuance Must document duration of the fixed payment amount for at least three years from the Application Received Date Documentation All of the following: ■ Fully executed trust agreement specifying fixed payment amount occurring at set intervals (e.g., monthly, quarterly) and duration of payments ■ Bank statements or equivalent documentation verifying receipt payments for the most recent one year ■ Evidence sufficient assets remain after the Note Date to support the qualifying income (e.g., bank statements, letter from trustee). When the Borrower is the trustee, a letter from the trustee is not acceptable documentation. Monthly income amount The fixed payment amount documented in the trust agreement (r) Tax-exempt income requirements When income is tax exempt, the Seller may adjust the monthly income amount for qualifying purposes by “grossing up” the verified monthly amount, in accordance with the following requirements in the table below. The following table contains stable monthly income and documentation requirements for tax-exempt income: Tax-exempt income Topic Stable monthly income requirements Minimum history of receipt No minimum history requirement for the tax-exempt status Continuance Must be likely to continue to remain tax exempt. The Seller must not have any knowledge, information or documentation that the income will not remain tax exempt. Documentation Complete federal individual income tax return for the most recent one-year period or other documentation evidencing that the income, or a portion of the income, is tax exempt. Exceptions: Evidence the income is tax exempt is not required to be documented for: ■ Child support income ■ Housing Choice Voucher Homeownership Program (also referred to as Section 8) ■ 15% of Social Security income (i.e., retirement income, disability benefits, survivor benefits and SSI) Tax-exempt income Topic Stable monthly income requirements Calculation The Seller may increase (i.e., “gross-up”) the Borrower’s income for qualification by adding to the tax-exempt income (or the tax-exempt portion of the income): ■ 25% of the tax-exempt income (or the tax-exempt portion of the income), or ■ The tax rate from the current federal and State income tax withholding tables of the taxexempt income (or the tax-exempt portion of the income) Example 1: The Borrower’s monthly Social Security income is $1,000 and 15% (i.e., $150) of the income is tax-exempt: ■ $150 x 25% = $37.50 ■ $1,000 + $37.50 = $1,037.50 (total qualifying Social Security income) Example 2: The Borrower’s child support income is $2,000, and the tax rate from the current federal and State income tax withholding tables is 30%: ■ $2,000 x 30% = $600 ■ $2,000 + $600 = $2,600 (total qualifying child support income) (s) Additional requirements for income from a foreign source (i.e., non-employment/non-self-employment income) The following requirements apply to other income (i.e., non-employment/non-self-employment) from a foreign source in addition to the requirements for the applicable income type in this chapter: Income from a foreign source (i.e., non-employment/non-self-employment income) Topic Stable monthly income requirements Eligibility Must be reported on the Borrower’s most recent U.S. federal individual income tax return Minimum history of receipt Refer to the income type(s) listed in this chapter for the requirements applicable to the income type received from the foreign source. Continuance Refer to the income type(s) listed in this chapter for the requirements applicable to the income type received from the foreign source. Documentation All of the following: ■ The Borrower’s most recent complete U.S. federal individual income tax return ■ Documentation for the applicable income type meeting the requirements of this chapter Monthly income amount Refer to the income type(s) listed in this chapter for the requirements applicable to the income type received from the foreign source.