Fannie Mae Selling Guide B3-3.2-01 — Standards for Employment and Income Documentation

Fannie Mae Selling Guide B3-3.2-01 — Standards for Employment and Income Documentation

B3-3.2-01, Standards for Employment and Income Documentation (03/04/2026) Introduction This topic contains information on the standards for documentation of employment income, including: General Documentation Requirements Documentation Provided by the Borrower Documentation Provided by the Borrower's Employer Documentation Provided by a Third-Party Employment Verification Vendor General Documentation Requirements Published May 6, 2026 310 The lender must verify employment income for all borrowers whose income is used to qualify for the loan. This verification can be provided by the borrower, by the borrower’s employer, or by a third-party employment verification vendor. The standards for employment documentation are the same for DU loan casefiles as they are for manually underwritten loans. For example, paystubs, W-2s, and tax returns must meet the same requirements without regard to the underwriting method. A year end paystub reflecting earnings from the entire year is acceptable in lieu of the W-2. When employment is validated through the DU validation service using an asset verification report, the lender is not required to obtain the employment verification documentation described below. DU will provide messaging indicating the documentation required. Lenders must comply with all requirements pertaining to the DU validation service. See B3-2-02, DU Validation Service for more information. Documentation Provided by the Borrower The following table provides requirements for documentation provided by the borrower. ✓ Requirements - Paystubs and W-2s The most recent paystub must be dated no earlier than 30 days prior to the initial loan application date and it must include all year-to-date earnings. Additionally, the most recent paystub must include sufficient information to appropriately calculate income; otherwise, additional documentation must be obtained. Paystubs must comply with B1-1-03, Allowable Age of Credit Documents and Federal Income Tax Returns. IRS W-2 forms must cover the most recent one- or two-year period, based on the documentation requirements for the particular income type, and must clearly identify the borrower as the employee. ”Most recent” W-2 is defined as the W-2 for the calendar year prior to the current calendar year. Alternative documentation, such as an IRS Wage and Income (W-2) Transcript, a written Request for Verification of Employment ( Form 1005) (see below) or the final year-to-date paystub, may be used as long as adequate information is provided. Documents must be computer-generated or typed by the borrower’s employer(s), although paystubs that the borrower downloads from the Internet are also acceptable. Documents must clearly identify the employer’s name and source of information. The information must be complete and legible. The original source of the information must be a third party, such as the borrower's human resources department, personnel office, payroll department, company's payroll vendor, or supervisor. For tax return requirements, see B3-3.1-02, Tax Return and Transcript Documentation Requirements. Published May 6, 2026 311 Documentation Provided by the Borrower's Employer The lender may use the Request for Verification of Employment ( Form 1005) to document employment and income. The date of the completed form must comply with B1-1-03, Allowable Age of Credit Documents and Federal Income Tax Returns. The information on Form 1005 must be legible. The following fields on Form 1005 are optional:The remaining fields on the form must be completed as applicable to the borrower. When the borrower authorizes the lender to obtain verifications of employment and income directly from the employer, the lender must have the borrower sign Form 1005. Field # Title of Optional Field 11 Probability of continued employment 14 If overtime or bonus is applicable, is its continuance likely? 16 Date of applicant’s next pay increase 17 Projected amount of next pay increase 18 Date of applicant’s last pay increase 19 Amount of last pay increase 24 Reason for leaving (Part III — Verification of Previous Employment) The remaining fields on the form must be completed as applicable to the borrower. When the borrower authorizes the lender to obtain verifications of employment and income directly from the employer, the lender must have the borrower sign Form 1005. Alternatively, the lender may have the applicant sign a signature authorization form, which gives the lender blanket authorization to request the information it needs to evaluate the applicant’s creditworthiness. See B1-1-02, Blanket Authorization Form, for additional information. Documentation Provided by a Third-Party Employment Verification Vendor The lender may receive employment and income verification directly from a third-party employment verification vendor. These verifications are acceptable as long as Published May 6, 2026 312 the borrower provided proper authorization for the lender to use this verification method, the date of the completed verification is in compliance with B1-1-03, Allowable Age of Credit Documents and Federal Income Tax Returns, the lender has determined that the vendor has made provisions to comply with reasonable quality control requests from both the lender and any subsequent mortgagee, and the lender understands it will be held accountable for the integrity of the information obtained from this source. If necessary, the lender must supplement these verifications by obtaining any missing information from the borrower or their employer. Loans that are submitted through the DU validation service must comply with all requirements pertaining to the DU validation service. See B3-2-02, DU Validation Service. Recent Related Announcements The table below provides reference to recently issued Announcements related to this topic. Announcements Issue Date Announcement SEL-2026-02 March 04, 2026

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