Freddie Mac Income Calculator FAQ

The Freddie Mac Income Calculator is for use by mortgage professionals, not by consumers or potential borrowers. Consumers or potential borrowers who are seeking a mortgage loan should contact a mortgage lender.

Users will need to certify that they are a mortgage professional prior to gaining access. A definition of “mortgage professional” is provided on the Freddie Mac Income Calculator webpage.

The income calculator supports employed income (base, bonus, overtime, commission) and self-employed income with IRS business structures of Schedule C, 1120S and 1065. In addition, the income calculator can assess rental income reporting on IRS Form 8825 through an 1120S or 1065.

See Single-Family Seller/Servicer Guide (Guide) Section 5303.4(b) for eligible employed income and Guide Section 5304.2(b) for eligible self-employed income. 

The calculator doesn’t assess military income, business income filed on fiscal year or income from businesses less than two years old. Sellers cannot use data from tax returns that are handwritten, amended or from a U.S. territory.

Yes, TPOs may use the calculator and results. The calculator identification number can be used by the sponsored Seller to submit to Loan Product Advisor^® (LPA^®).

The income calculator doesn’t require use of a third-party service provider or the ordering of verification reports. The calculator requires manual data entry and is a free tool.

Yes, the income calculator leverages the same capabilities used by AIM and AIM Check API to calculate income.

The income calculator may help reduce income calculation errors and potentially reduce defects. The income calculator may also provide eligibility for representation and warranty (R&W) relief for the accuracy of the income calculation, and business review and analysis (for self-employed income).

For wage earners, you must submit data from at least one paystub and one income document from a previous year, such as a year-end paystub or a W-2. 

For self-employed borrowers, you must submit data from:

• One year of tax returns or transcripts (Schedule C only) for a business that has been in existence for five or more years.
• Two years of tax returns or transcripts for a business that has been in existence for less than five years. In addition, the tax data must reflect at least two years history of receipt of income and/or losses from the business.

Only paystubs or W-2s are acceptable documentation for the income calculator. Written verifications of employment (VOE) are not allowed. For verification reports from service providers, you should use AIM instead of the income calculator.

For self-employed borrowers, you must use tax data to use the calculator. If a self-employed borrower has both wage income and self-employed income, the self-employed income can be entered into the calculator, and the wage income must be documented in accordance with the Guide.

Yes. See Guide Section 5102.4 for age of documentation requirements.

The income calculator can assess income even if the borrower has changed employers. Previous employment information should be provided to the calculator, if applicable.

The ‘lock calculation’ feature can only be initiated by the user from the income calculator’s online interface. Once the calculation is locked, no user can edit it. A new calculator entry would need to be created if you wanted to enter different data (e.g., updated paystub, employment detail).

There’s no automatic lock when the loan is submitted to LPA with a calculator identification number.

Depending on the time of year and date of the paystub, seasonal income can be assessed via the income calculator. The paystub must comply with the age of documentation requirements for the calculation to work. See Guide Section 5102.4 for age of documentation requirements.

Yes, the income calculator assesses fluctuating income for both wage earners and self-employed borrowers. For self-employed income, the calculator will identify whether fluctuating income exists when two years of tax returns are provided. For income that does not receive eligibility in the calculator, you must follow the requirements in the Guide.

Additional enhancements will be made to the income calculator at a later time to address more income scenarios, including more scenarios with fluctuating income.

Yes, but it’s not required. The income calculator allows you to enter multiple businesses or employments for multiple borrowers in one submission and returns one associated calculator identification number.

When submitting to LPA, you can submit multiple calculation identification numbers. LPA will assess R&W relief eligibility and return message(s) on the feedback certificate.

Note: If you have self-employed borrowers that also report wage income not from their self-employed business, you can only use the income calculator using data from tax documentation.

For paystub/W-2 data, up to five borrowers for each calculator submission.

For tax data, up to two borrowers for each calculator submission.

Each calculator submission has its own calculator identification number. You may use separate calculation submissions for additional borrowers.

The Freddie Mac Income Calculator Certificate will return messages when income cannot be assessed with reasons explaining why the income could not be assessed. There are income types and characteristics that the calculator can’t assess today that may be added at a later date.

For example, self-employed income when one of the businesses is on a fiscal year tax filing schedule or one of the businesses has less than two years of income tax receipts will return a message that states: “The Freddie Mac Income Calculator is unable to assess total self-employed income due to a combination of risk factors.”

If you’re not submitting the calculator identification number to LPA, the income used per employment/business to underwrite the loan must be the same or less as returned on the calculator certificate to retain R&W relief eligibility.  

If you’re submitting the calculator identification number to LPA, LPA will make the determination if the submitted amount is supported and eligible for income R&W relief. You must submit the income amount used to underwrite the loan.

No. Once you provide your business email address in the calculator, you’ll receive an automatic email with the calculator identification number (Freddie Mac-generated) and loan information (user provided as inputted into calculator). The calculator identification number allows you to return to the income calculator to retrieve the calculator entry and associated calculator certificate.

Any user can view past calculations within the income calculator’s interface using the assigned calculator identification number. Use the calculator identification number with the Existing Calculation feature to look up the last calculation for that identification number. You and your team can also track calculator submissions via confirmation e-mail, which include the submission’s calculator identification number and loan information.

The income calculator will keep results for 18 months from the last submission date.

No. However, you can choose not to include the calculator certificate in the loan file or not include the calculator identification number in an LPA submission. Additionally, when the calculator identification number was submitted to LPA, you can remove the calculator identification number from a subsequent LPA submission.

If you haven’t yet exited the income calculator, email addresses can be added in the final step at the end of the calculation. If you’ve already exited the calculator, then the calculator identification number can’t be searched, and a new calculation must be started. A best practice is to print and save the calculator certificate, which contains the calculator identification number.

R&W eligibility is on the employment or business level per borrower. To retain R&W relief, you would need to submit the amount (or less) calculated by the income calculator per employment or business in LPA and maintain the calculator certificate in the mortgage file.

R&W eligibility is assessed on the loan level and partial level. The LPA feedback certificate will detail the R&W eligibility results. The calculator certificate must be maintained in the mortgage file to be eligible for R&W relief.

• When LPA returns loan-level R&W relief eligibility, LPA has assessed sufficient income just from income calculator data for R&W relief eligibility. Any income not assessed by LPA must be either removed from the LPA submission or must be documented in accordance with the Guide.
• When LPA returns partial R&W relief eligibility, LPA has assessed sufficient income using income calculator data plus additional income on the loan. The additional income not assessed by LPA must be documented using requirements of the Guide and stated in the feedback certificate messages.

Income R&W relief eligibility on the Freddie Mac Income Calculator Certificate is at the employment or business level. The income submitted to the income calculator on its own may not be sufficient for the loan to receive an Accept risk class in LPA. 

Income R&W relief eligibility on the LPA feedback certificate may provide loan-level or partial R&W relief eligibility. When LPA returns loan-level R&W relief, LPA has assessed sufficient income just from income calculator data for R&W relief eligibility. Any income not assessed by LPA must be either removed from the LPA submission as stated in the feedback messages or documented in accordance with the Guide.

When LPA returns partial R&W relief eligibility, LPA has assessed sufficient income using income calculator data plus additional income on the loan. The additional income not assessed by LPA must be documented using requirements of the Guide and stated in the feedback certificate messages.

Only R&W relief eligibility from LPA will flow to other Freddie Mac systems, such as Loan Selling Advisor^® and Loan Coverage Advisor^®.

Income R&W relief eligibility determined by the Freddie Mac Income Calculator and LPA is for:

• The accuracy of the income calculation.
• Business review and analysis (for self-employed income only).

R&W relief eligibility from the income calculator doesn’t include R&W relief for the integrity of the data. The same applies when the calculator identification number is submitted to LPA and income is eligible for R&W relief.
 

Yes. R&W relief eligibility is only for the seller of the loan to Freddie Mac.

R&W relief eligibility is for:

• The accuracy of the income calculation.
• Business review and analysis (for self-employed income only).

The Seller is not relieved of R&Ws when there is fraud.

The income calculator certificate can still provide R&W relief eligibility on the employment or business level for the accuracy of the income calculation, and business review and analysis (for self-employed income). This applies even when the feedback certificate returns a result of Not Eligible or Unavailable.

However, please check the LPA feedback certificate to determine if the loan is eligible for partial relief, as that could be overlooked. When LPA returns partial R&W relief eligibility, LPA has assessed sufficient income using income calculator data plus additional income, when applicable, on the loan. The additional income not assessed by LPA must be documented using requirements of the Guide and stated in the feedback certificate messages.

No, the income calculator identification number isn’t required to be used with an LPA submission. However, the best practice is to include the calculator identification number in the LPA loan submission for the R&W relief eligibility to appear on the feedback certificate and to flow to downstream Freddie Mac systems, such as Loan Selling Advisor and Loan Coverage Advisor.

Yes, LPA will always use the latest results associated with the calculator identification number.

Income calculator entries are only reflected in the LPA feedback certificate if the calculator identification number is submitted to LPA. You should submit the amount used to underwrite the loan in LPA, and LPA will assess R&W relief eligibility and return results in the LPA feedback certificate.

For loans where the calculator identification number is not submitted in LPA, you must enter into LPA the amount returned on the calculator certificate or less to maintain the R&W relief eligibility provided on the calculator certificate. If more income is submitted than what is shown on the calculator certificate, the Seller will not be eligible for R&W relief and Single-Family Quality Control will perform their income review with documentation in the loan file.

When the calculator identification number is submitted in LPA, LPA uses the latest transaction for each identification number to assess income R&W relief eligibility.  

In addition, LPA uses matching of employment or business name and start date. A best practice is to confirm that the business or employment name and start date in the LPA submission matches the information in the income calculator submission.