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For borrowers who may not have enough traditional income to qualify for the mortgage, Freddie Mac provides an alternative path: converting eligible assets into monthly income using its asset depletion method. This calculated income can be added to other verified earnings and plays a direct role in establishing the debt payment and determining the debt payment-to-income ratio. By using documented assets instead of relying solely on employment-based income, lenders can improve a borrower’s ability to

Rental income plays a crucial role in the mortgage application process, especially when borrowers rely on income from investment properties or rental units to qualify. For lenders, Freddie Mac (Federal Home Loan Mortgage Corporation) provides a comprehensive set of guidelines that dictate how rental income must be verified and calculated in order to ensure underwriting decisions are compliant and consistent. In this article, we will discuss the key requirements, acceptable income sources, calculation methods, necessary

In 2025, the Federal Housing Administration (FHA) continues to make homeownership accessible to first-time homebuyers and buyers with limited funds in their savings accounts. One way they do this is by allowing these borrowers to receive financial assistance through gift funds from eligible sources that can cover a portion or all of their down payment and closing costs. However, the use of these funds is subject to evolving guidelines established by the FHA. In this

Mortgage underwriting contains complex income qualification standards, especially for rental properties. Fannie Mae, as one of the nation’s leading mortgage purchasers, establishes specific guidelines that lenders must follow when evaluating rental income for mortgage qualification purposes. These standards create consistency, accuracy, and proper risk assessment across the mortgage industry. Understanding these guidelines helps mortgage professionals manage the qualification process while reducing errors that could impact loan approval. In this article, we will discuss the key

Gift funds can be a valuable tool for helping borrowers meet down payment and closing cost requirements, especially when liquidity is a barrier to homeownership. Fannie Mae provides clear guidance on when gift funds are allowed, who can provide them, and acceptable documentation to ensure compliance. For mortgage lenders, understanding the nuances of gift fund eligibility and documentation is critical to maintaining loan quality and meeting agency guidelines. This article outlines the key rules, acceptable

FHA loans provide a way to homeownership for Americans who don’t qualify for conventional financing. While these government-backed Federal Housing Administration loans offer flexible qualification standards, they maintain core requirements to manage risk. When borrowers fall short of standard metrics, compensating factors become essential tools in the process. This article examines how FHA lenders can assess financially strong borrowers using alternative evaluation methods. Main takeaways from this article: FHA compensating factors allow underwriters to approve

Fannie Mae’s Form 1007, formally known as the Single-Family Comparable Rent Schedule, is a vital document in the appraisal process for investment properties, particularly one-unit properties and single-family homes. This form plays a critical role for both appraisers, who are responsible for its accurate completion, and lenders, who rely on it to evaluate a property’s income-generating potential and the borrower’s financial capacity. In this article, we provide a comprehensive overview of Form 1007, detailing its