source:
  type: guide
  id: fhlmc-5303.1
  authority: Freddie Mac Single-Family Seller/Servicer Guide Section 5303.1 — Employed
    income
  description: Freddie Mac Single-Family Seller/Servicer Guide Section 5303.1 — Employed
    income.
  coverage_tier: operative
obligations:
- id: fhlmc-5303.1-full
  canonical_id: fhlmc-5303.1-full
  section: Freddie Mac Single-Family Seller/Servicer Guide Section 5303.1 — Employed
    income
  type: do
  tags:
  - regulator-direct
  - fhlmc
  - freddie-guide
  - corpus-expansion
  - tier-operative
  primary_source:
    tier: 1
    authority: Freddie Mac Single-Family Seller/Servicer Guide Section 5303.1 — Employed
      income
    source_class: fhlmc-guide
    source_url: https://guide.freddiemac.com/ci-guide
    snapshot_id: 5869ee9e606cd4ae
    fetched_at: '2026-05-23T00:27:40Z'
    content_hash: sha256:9a1b23e5024bb369e7a59d36b3702383c11ace68b5d209fdef791bc8f955c637
    paragraph_quote: '5303.1: Employed income (04/01/26) This section contains requirements
      and guidance related to: ■ Requirements for all employed income ■ Employment
      history requirements ■ Non-fluctuating employment earnings (base, entitlements,
      military reserve, National Guard) ■ Fluctuating employment earnings (base fluctuating
      hourly earnings, additional fluctuating earnings) ■ Employment/income characteristics
      – requirements and guidance Examples throughout this section are provided for
      illustrative purposes only and do not represent the only allowable scenario(s).
      (a) Requirements for all employed income All employed income used for qualifying
      must meet the requirements and guidance of this chapter and Section 5301.1 for
      all stable monthly income. (i) Stability and continuance of income The Seller
      must determine that the amount of income used to qualify the Borrower is stable
      and complies with the requirements for each income type. All income must be
      expected to continue or have documented continuance for at least three years
      as described in this chapter. The Seller must analyze all income documentation
      while taking into consideration the characteristics of the employed income (e.g.,
      employment source, earnings type, income type and stability of the employment
      history, including any gaps in employment). Freddie Mac Single-Family Seller/Servicer
      Guide Chapter 5303 As of 05/06/26 Page 5303-2 A Borrower who has had different
      types of employment in the past may be considered to have stable income if the
      income amount has remained at a consistent level. When evaluating a Borrower
      who has frequently changed jobs, the Seller must focus on whether the changes
      have affected the Borrower’s ability to pay their obligations. (ii) Primary
      and secondary employment types Primary employment is the primary source of the
      Borrower’s employed income whether derived from employment such as full-time
      employment, part-time employment, and/or seasonal employment. Secondary employment
      is any type of employment (e.g., second part-time job or multiple jobs) that
      is in addition to the Borrower’s primary employment. (b) Employment history
      requirements (i) Primary employment In most instances, the Borrower should have
      at least a two-year history of primary employment documented on Form 65, Uniform
      Residential Loan Application, and verified in accordance with Topic 5300. For
      Borrowers who are active-duty members of the U.S. Armed Forces, a history of
      military employment is not required for the employment to be considered stable.
      Tenure with the same employer or in a similar industry lends support to the
      analysis of employment stability. When a Borrower has less than a two-year history
      of primary employment, the Seller must provide its justification for determining
      that the employment is stable, taking into consideration factors such as income
      and/or employment characteristics and the overall layering of risk factors,
      including the Borrower’s demonstrated ability to repay obligations. Examples
      that may support less than a two-year history (see minimum history requirements
      below): ■ Example 1: For a Borrower returning to the workforce after a period
      of extended absence, for any reason, documentation is provided to support a
      stable employment history that directly preceded the extended absence Freddie
      Mac Single-Family Seller/Servicer Guide Chapter 5303 As of 05/06/26 Page 5303-3
      ■ Example 2: For a Borrower new to the workforce, documentation is provided
      that supports the Borrower’s recent attendance at school or in a training program
      prior to their current employment Minimum history requirements for base fluctuating
      hourly earnings: For additional minimum history requirements (e.g., 12 months)
      for base fluctuating hourly earnings, refer to the history requirements in Section
      5303.1(d), below. (ii) Secondary employment In most instances, the Borrower
      should have at least a two-year history of secondary employment for the employment
      to be considered stable. When a Borrower has less than a two-year secondary
      employment history but has at least a 12-month history, the Seller may be able
      to justify and determine the employment is stable. Examples that may support
      less than a two-year history: ■ Example 1: The Borrower previously held a job
      with base non-fluctuating earnings working 40 hours per week for multiple years;
      however, due to reasons such as position elimination, work force reduction,
      or illness, the Borrower is no longer employed at this job and now works at
      multiple part-time jobs that are similar in hours and pay, when combined, to
      the previous full-time job. Since the Borrower’s full-time employment ended
      18 months ago, the length of employment at each part-time job is in the range
      of 13 to 15 months. In this scenario, the Seller may be able to justify an employment
      history of less than two years for the secondary and additional jobs provided
      the earnings are consistent and the Borrower has exhibited the ability to repay
      obligations. ■ Example 2: The Borrower is employed as a school teacher. During
      the previous summer, the Borrower taught summer school and is now starting summer
      school teaching for the current year. Although the two-year history is not yet
      fully developed, given the job type and current employment situation, the Seller
      may be able to justify including the summer school income, provided an accurate
      qualifying amount can be established and documented based on the previous and
      current earnings. Additional documentation to determine the stable monthly income
      may be appropriate (e.g., how many classes, how much, is it similar to prior
      year). Freddie Mac Single-Family Seller/Servicer Guide Chapter 5303 As of 05/06/26
      Page 5303-4 (c) Non-fluctuating employment earnings (base, military, additional
      fixed earnings) Requirements for history, continuance, calculation and documentation
      for non-fluctuating employment earnings are outlined in the tables below. Additional
      documentation may be required to determine the stable monthly income amount.
      Refer to Section 5303.1(e) for additional documentation and requirements that
      may apply based on employment characteristics. (i) Base non-fluctuating employment
      earnings Earnings type: Base non-fluctuating employment earnings are stable
      and consistent earnings that may be salaried or hourly. Base non-fluctuating
      earnings may include: ■ Exempt (salaried) ■ Military base (basic) pay ■ Non-exempt
      (hourly) earnings. The pay rate and number of hours are reflected on an ongoing
      consistent basis for each pay period and must be supported by the year-to-date
      (YTD) income. If the only reason the earnings fluctuate is because of additional
      employed income (e.g., overtime), the base earnings are still considered non-fluctuating.
      (A) Minor fluctuations in hours Minor variations in base hours on paystubs (e.g.,
      Borrower clocked out a few minutes early) are acceptable and may be treated
      as base non-fluctuating earnings when the variation is no more than an hour
      per week. Minor variations do not automatically render the base earnings as
      fluctuating if the historical earnings support the level of pay. Example: The
      pay frequency is weekly. The current YTD paystub shows 39.78 hours while the
      prior paystub shows 40 hours. The YTD income reasonably supports 40 hours per
      week of gross pay and the prior year W-2(s) support a similar amount of pay.
      (B) Exception for non-exempt earnings: primary employment earnings with minimum
      required hours Freddie Mac Single-Family Seller/Servicer Guide Chapter 5303
      As of 05/06/26 Page 5303-5 For Borrowers with primary employment earnings that
      fluctuate but have a position with a minimum number of required hours, the earnings
      may be considered non-fluctuating, and the minimum required hours are acceptable
      to use for gross pay when following requirements are met: ■ The Seller must
      obtain written documentation from the employer confirming the minimum required
      hours (i.e., written verification of employment (VOE), offer letter or equivalent
      documentation) ■ The documented minimum required hours must be supported by
      YTD income and prior year, as applicable Only the minimum required hours may
      be considered non-fluctuating. The requirements for fluctuating employment earnings
      apply to any additional hours used to qualify the Borrower. Example (minimum
      required hours): The Borrower has been with the current employer as a nurse
      with a hospital for four months; prior to that, the Borrower was in nursing
      school. The written VOE verifies the Borrower works three 12-hour shifts each
      week, which is common for this profession, and the YTD earnings support at least
      this level of gross pay. Based on this, it is acceptable to consider these the
      minimum required hours and use 36 hours weekly gross pay for income calculation.
      Base non-fluctuating employment earnings – primary and secondary employment
      Topic Stable monthly income requirements Employment history Refer to the employment
      history requirements in Section 5303.1(b), above. Continuance Must be likely
      to continue for at least the next three years Freddie Mac Single-Family Seller/Servicer
      Guide Chapter 5303 As of 05/06/26 Page 5303-6 Base non-fluctuating employment
      earnings – primary and secondary employment Topic Stable monthly income requirements
      Documentation ■ Primary employment earnings: base non-fluctuating earnings All
      of the following: ❑ YTD paystub(s) documenting all YTD earnings ❑ W-2 form(s)1
      for the most recent calendar year ❑ 10-day pre-closing verification (10-day
      PCV) Or all of the following: ❑ Written VOE documenting all YTD earnings and
      the earnings for the most recent calendar year ❑ 10-day PCV ■ Secondary employment
      earnings: base non-fluctuating earnings All of the following: ❑ YTD paystub(s)
      documenting all YTD earnings ❑ W-2 forms1 for the most recent two calendar years
      ❑ 10-day PCV Or all of the following: ❑ Written VOE documenting all YTD earnings
      and the earnings for the most recent two calendar years ❑ 10-day PCV Calculation
      For all income used to qualify the Borrower, the Seller must determine the pay
      frequency (weekly, bi- weekly, semi-monthly, monthly, quarterly, annually) to
      accurately analyze and calculate the stable Freddie Mac Single-Family Seller/Servicer
      Guide Chapter 5303 As of 05/06/26 Page 5303-7 Base non-fluctuating employment
      earnings – primary and secondary employment Topic Stable monthly income requirements
      monthly income. All documentation in the Mortgage file must support the Seller’s
      income analysis and calculation. The following table describes the calculation
      methods the Seller must use to determine stable monthly income for base non-fluctuating
      employment earnings, taking into consideration the typical pay periods of weekly,
      bi-weekly, semi-monthly and monthly. Calculation of base non-fluctuating employment
      earnings Pay period type Calculation Weekly Multiply the weekly gross pay by
      52 and divide by 12. Bi-weekly (every two weeks) Multiply the biweekly gross
      pay by 26 and divide by 12. Semi-monthly (twice per month) Multiply the semi-monthly
      gross pay by 24 and divide by 12. Monthly Use the monthly gross pay. Annual
      base non- fluctuating salary paid out over less than 12 months per year (e.g.,
      teachers) Divide annual gross pay by 12 Example: If the annual salary is paid
      out over 10 months of the year, multiply the monthly base salary amount by 10
      months and divide by 12. 1 Refer to Section 5302.2(b) for W-2 form requirements
      and documentation that may be used in lieu of a W-2 form (e.g., year-end YTD
      paystub). Freddie Mac Single-Family Seller/Servicer Guide Chapter 5303 As of
      05/06/26 Page 5303-8 (ii) Military earnings (base, entitlements, reserve, National
      Guard) (A) Military base (basic) pay Base non-fluctuating earnings include military
      base (basic) pay. For members of the U.S. Armed Forces, active-duty pay is considered
      base non-fluctuating earnings. Military base (basic) pay Topic Stable monthly
      income requirements Employment history For Borrowers who are active-duty members
      of the U.S. Armed Forces, a history of military employment is not required for
      the employment to be considered stable. Continuance Must be likely to continue
      for at least the next three years Documentation YTD Military Leave and Earnings
      Statement Or all of the following: ■ Written VOE documenting all YTD earnings
      ■ 10-day PCV Calculation Refer to calculation guidance and requirements for
      base non-fluctuating employment earnings in Section 5303.1(c)(i), directly above.
      (B) Military entitlements (e.g., flight or hazard duty, rations, clothing allowance
      or quarters allowance) Freddie Mac Single-Family Seller/Servicer Guide Chapter
      5303 As of 05/06/26 Page 5303-9 Military entitlements (e.g., flight or hazard
      duty, rations, clothing allowance or quarters allowance) Topic Stable monthly
      income requirements 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 Documentation YTD Military Leave and Earnings
      Statement Or all of the following: ■ Written VOE documenting the current monthly
      fixed entitlement amount(s) and type(s) ■ 10-day PCV Calculation Current fixed
      monthly amount (C) Military reserve and National Guard income Military reserve
      and National Guard income Topic Stable monthly income requirements History of
      receipt One year Continuance Must be likely to continue for at least the next
      three years Freddie Mac Single-Family Seller/Servicer Guide Chapter 5303 As
      of 05/06/26 Page 5303-10 Military reserve and National Guard income Topic Stable
      monthly income requirements Documentation All of the following: ■ YTD Military
      Leave and Earnings Statement ■ W-2 form1 for the most recent calendar year Or
      all of the following: ■ Written VOE documenting all YTD earnings and the earnings
      for the most recent calendar year ■ 10-day PCV Calculation 12-month average
      1 Refer to Section 5302.2(b) for W-2 form requirements and documentation that
      may be used in lieu of a W-2 form (e.g., year-end Military Leave and Earnings
      Statement). (iii)Additional fixed employment earnings (automobile allowance,
      mortgage differential) For the purposes of determining stable monthly income,
      additional fixed employment earnings are considered to be earnings that are
      based on a pre-determined and agreed upon fixed amount of pay that is fully
      documented, such as an automobile allowance or mortgage differential. Generally,
      additional employment earnings are received in connection with the primary or
      secondary employment. For additional fixed employment earnings used to qualify
      the Borrower, the Seller must determine that the amount of income used to qualify
      the Borrower is stable and complies with the requirements below for each income
      type. All income must be expected to continue or have documented continuance
      for at least three years as described in this section. (A) Automobile allowance
      Freddie Mac Single-Family Seller/Servicer Guide Chapter 5303 As of 05/06/26
      Page 5303-11 Automobile allowance Topic Stable monthly income requirements History
      of receipt Two years, consecutive Continuance Must be likely to continue for
      at least the next three years Documentation All of the following: ■ YTD paystub(s)
      documenting all YTD earnings ■ W-2 forms1 for the most recent two calendar years
      ■ 10-day PCV Or all of the following: ■ Written VOE documenting all YTD earnings
      and the earnings for the most recent two calendar years ■ 10-day PCV Calculation
      Add the full amount of the allowance to the qualifying income. Note: The Seller
      may not subtract the automobile allowance from the monthly automobile financing
      expense. 1 Refer to Section 5302.2(b) for W-2 form requirements and documentation
      that may be used in lieu of a W-2 form (e.g., year-end YTD paystub). (B) Mortgage
      differential Freddie Mac Single-Family Seller/Servicer Guide Chapter 5303 As
      of 05/06/26 Page 5303-12 Mortgage differential Topic Stable monthly income requirements
      History of receipt A history of receipt is not required for the income to be
      considered stable. Continuance Must continue for at least three years from the
      Application Received Date Documentation Agreement from the employer stating
      the terms including the scheduled amount and duration of the payments. The documentation
      must show that the payments are pursuant to an established, ongoing and documented
      employer program. The employer must not be an interested party to the transaction.
      Calculation Payments from the Borrower’s employer for all or part of the housing
      payment differential between the Borrower’s present and proposed Mortgage payment
      may be added to the qualifying income. Note: The payments may not be used to
      offset the monthly housing payment amount used for qualification. (d) Fluctuating
      employment earnings (Base fluctuating hourly earnings, additional fluctuating
      earnings) Requirements for history, continuance, calculation and documentation
      for fluctuating employment earnings are outlined in the tables below. Additional
      documentation may be required to determine the stable monthly income amount.
      Refer to Section 5303.1(e) for additional documentation and requirements that
      may apply based on employment characteristics. Freddie Mac Single-Family Seller/Servicer
      Guide Chapter 5303 As of 05/06/26 Page 5303-13 (i) Base fluctuating hourly employment
      earnings Earnings type: Base fluctuating hourly employment earnings are not
      pre-determined and may fluctuate each pay period. ■ Example 1: The pay frequency
      is weekly. The current YTD paystub shows 37 hours. The prior pay period YTD
      paystub shows 31 hours. This is typically an indication that the base hours
      fluctuate. ■ Example 2: The pay frequency is weekly. The paystub shows 37 hours
      at a pay rate of $30 per hour and reflects six months of YTD income. If the
      Borrower’s paystub shows 37 hours every week, the YTD earnings are approximately
      $28,860. However, the YTD base earnings on the paystub are $20,240. This income
      documentation shows fluctuating hourly earnings and additional documentation
      is necessary to determine otherwise. Base fluctuating hourly employment earnings
      Topic Stable monthly income requirements Employment history Refer to employment
      history requirements in Section 5303.1(b), above. In addition, when the Borrower’s
      employed income is derived from base fluctuating hourly employment earnings,
      the Borrower must have at least a 12-month history of employment. The required
      minimum 12-month history must be derived from one of the following: ■ The Borrower’s
      current fluctuating hourly employment ■ A combination of current and prior fluctuating
      hourly employment ■ A combination of current fluctuating hourly employment and
      prior salaried employment in a similar industry or job type that had an income
      level consistent with the current income level based on trend analysis described
      in this table in the row labeled “calculation method and trend analysis for
      consistent and increasing income trends” below. Continuance Must be likely to
      continue for at least the next three years Freddie Mac Single-Family Seller/Servicer
      Guide Chapter 5303 As of 05/06/26 Page 5303-14 Base fluctuating hourly employment
      earnings Topic Stable monthly income requirements Documentation ■ Primary employment
      earnings: Base fluctuating hourly earnings All of the following: ❑ YTD paystub(s)
      documenting all YTD earnings ❑ W-2 form(s)1 for the most recent calendar year
      ❑ 10-day PCV Or all of the following: ❑ VOE documenting all YTD earnings and
      the earnings for the most recent calendar year ❑ 10-day PCV ■ Secondary employment
      earnings: Base fluctuating hourly earnings All of the following: ❑ YTD paystub(s)
      documenting all YTD earnings ❑ W-2 forms1 for the most recent two calendar years
      ❑ 10-day PCV Or all of the following: ❑ Written VOE documenting all YTD earnings
      and the earnings for the most recent two calendar years ❑ 10-day PCV Freddie
      Mac Single-Family Seller/Servicer Guide Chapter 5303 As of 05/06/26 Page 5303-15
      Base fluctuating hourly employment earnings Topic Stable monthly income requirements
      General requirements for calculating income When calculating qualifying income,
      the Seller must: ■ Determine and consider the pay frequency (weekly, bi-weekly,
      semi-monthly, monthly, quarterly, annually) to accurately analyze and calculate
      the stable monthly income ■ Determine if the income trend is consistent, increasing
      or declining by comparing the YTD income to prior year(s) income and taking
      into consideration the length of receipt and degree of fluctuation ■ Evaluate
      the income trend and use the amount that is most likely to continue for the
      next three years ■ Ensure that all documentation in the Mortgage file supports
      the Seller’s income analysis and calculation Calculation method and trend analysis
      for consistent and increasing income trends Calculation method: consistent and
      increasing income trends The Seller must average the most recent year(s) and
      YTD income. The amount of time averaged should be determined based on the requirements
      for history, documentation and other applicable factors such as time at the
      current employer, prior employment and consistency of the earnings level. Note:
      If the increasing income is due to a pay raise, the Seller may use the calculation
      method as described in this table in the row labeled “pay raises” below. Calculation
      examples for primary employment: Example 1: Current employer five years Employment
      history Documentation and Degree of Calculation Freddie Mac Single-Family Seller/Servicer
      Guide Chapter 5303 As of 05/06/26 Page 5303-16 Base fluctuating hourly employment
      earnings Topic Stable monthly income requirements base earnings amount fluctuation
      Current employer: Five years May 31st YTD paystub YTD base: $24,200 Prior year
      W-2 $55,0001 5.6% Consistent Average 17 months (YTD + prior year) 1 If W-2s
      from the most recent two years are in the Mortgage file, only the most recent
      YTD and prior year earnings must be included in the average if the income is
      reasonably stable. Example 2: Recent or frequent job changes Employment history
      Documentation and base earnings amount Degree of fluctuation Calculation Current
      employer: Three months March 31st YTD paystub YTD average: $5,000/month 25%
      Increasing1 Average 15 months (YTD + prior year) Previous employers: Three employers
      in most recent 12 months; similar job types and industry Three W-2s from previous
      employers W-2 combined average: $4,000/month Freddie Mac Single-Family Seller/Servicer
      Guide Chapter 5303 As of 05/06/26 Page 5303-17 Base fluctuating hourly employment
      earnings Topic Stable monthly income requirements 1 Trend analysis must be completed.
      Exception: The Seller may average using less than the most recent year(s) and
      YTD income if the income is supported by the employment history, historical
      earnings and documentation. This depends on individual circumstances, and the
      level of income must reasonably be expected to continue and represent stable
      monthly income. Calculation examples for exception Example 1: Current employer
      less than two years (likely fits within exception) Employment History Degree
      of fluctuation Exception calculation Current employment: 10 months 4% Consistent
      (reasonable based on job type and industry) Average 10 months (current employment)
      Previous employment: Two years Similar job type and/or industry Example 2: Current
      employer less than two years (likely does not fit within exception) Freddie
      Mac Single-Family Seller/Servicer Guide Chapter 5303 As of 05/06/26 Page 5303-18
      Base fluctuating hourly employment earnings Topic Stable monthly income requirements
      Employment history Base earnings amount Degree of fluctuation Exception calculation
      Current employment: Five months YTD average: $2,500/month 67% Increasing N/A
      Example likely does not fit within exception due to employment history and historical
      earnings Previous employment: Two years Two employers Similar job type and/or
      industry W-2 combined average: $1,500/month Trend analysis: consistent and increasing
      income trends: ■ Degree of fluctuation ≤ 10% Income trend is considered consistent.
      No additional analysis or documentation is required when calculating the qualifying
      income. ■ Degree of fluctuation > 10% – ≤ 30% No additional analysis or documentation
      is required when the increase is supported by the verification of pay raise
      described in this table in the row labeled “pay raises,” below, and/or the documented
      income breakdown described in the row labeled “documented income breakdown”
      in the table for bonus, commission, overtime and tips in Section 5303.1(d)(ii)(A),
      below. Freddie Mac Single-Family Seller/Servicer Guide Chapter 5303 As of 05/06/26
      Page 5303-19 Base fluctuating hourly employment earnings Topic Stable monthly
      income requirements Otherwise, additional analysis is required, and additional
      documentation may be necessary to determine income stability and develop an
      accurate calculation of qualifying income. The analysis and documentation must
      support the amount of income used to qualify the Borrower. ■ Degree of fluctuation
      > 30% Additional analysis is required, and additional documentation will likely
      be necessary to determine income stability and develop an accurate calculation
      of qualifying income. The analysis and documentation must support the amount
      of income used to qualify the Borrower. When using an average with the YTD and
      most recent year, the degree of fluctuation is based on the increase between
      the YTD and the prior year When using an average with the YTD and the prior
      two years, the degree of fluctuation is based on the increase between the YTD
      and the prior two years Pay raises Verification of pay raises and using pay
      increase in calculation of income Merit, promotional or other types of increases
      in pay may justify using different averaging methods for fluctuating hourly
      earnings based on the application of the new pay rate to the average hours for
      the prior year and YTD. While documentation to verify pay raises is not always
      required, it may be used to support a higher amount of qualifying income and/or
      support fluctuating hourly earnings when the degree of fluctuation exceeds 10%.
      Verification method: Use employed income documentation outlined in Chapter 5302,
      such as written VOEs and paystubs. Paystubs from the current or prior year that
      show the new and old rates of pay when the raise occurred and/or year-end paystubs
      will likely be necessary to Freddie Mac Single-Family Seller/Servicer Guide
      Chapter 5303 As of 05/06/26 Page 5303-20 Base fluctuating hourly employment
      earnings Topic Stable monthly income requirements complete this verification.
      Calculation method For consistent and increasing income trends, use one of the
      options below: ■ Option 1: Average the most recent year(s) and YTD income, as
      described in this table in the row labeled “calculation method and trend analysis
      for consistent and increasing income trends” above ■ Option 2: Apply the current
      pay rate to the average number of hours during the prior year and the current
      year, provided the hours during the prior year and the current year are consistent
      or increasing, and documented Calculation: Excluding time periods based on a
      specific event unlikely to recur Calculation: Excluding time periods based on
      a specific event unlikely to recur In certain instances, income may be calculated
      using a shorter time period; however, the Seller must provide a written justification
      and/or documentation supporting the months used in the calculation. When excluding
      a time period based on a specific event that is unlikely to recur, at least
      12 months of stable monthly income must still be used in the calculation. These
      12 months do not need to be consecutive (i.e., the period impacted by the non-recurring
      event can be excluded). Example: The Borrower has a 10-year employment history
      as a restaurant manager. The June 2025 YTD paystub, 2024 W-2 and 2023 W-2 have
      been provided. While the June 2025 YTD paystub and 2023 W-2 earnings support
      approximately $60,000 in base earnings per year, the 2024 W-2 earnings are low
      at $30,000. Documentation in the file verifies that the restaurant was closed
      for renovations from April Freddie Mac Single-Family Seller/Servicer Guide Chapter
      5303 As of 05/06/26 Page 5303-21 Base fluctuating hourly employment earnings
      Topic Stable monthly income requirements through September of 2024, which supports
      a justifiable one-time event and the resulting reduced earnings, so it is reasonable
      to exclude the 2024 earnings from the calculation and average the 2025 YTD and
      2023 earnings over 18 months or take the 2024 earnings for 6 months and 2025
      YTD earnings of 6 months to get an average across 12 earning months (ignoring
      the specific event). Calculation method and trend analysis for declining trend
      Calculation method and trend analysis: declining trend The Seller must use the
      YTD income and must not include the previous higher level unless there is documentation
      of a one-time occurrence (e.g., injury) that prevented the Borrower from working
      or earning full income for a period of time and evidence that the Borrower is
      back to the income amount that was previously earned. If the decline between
      the prior year(s) and/or YTD earnings exceeds 10%, the Seller must conduct further
      analysis, and additional documentation may be necessary to determine whether
      the income is currently stable. This analysis must include the reason for the
      declining trend, and support that the current income has stabilized. 1 Refer
      to Section 5302.2(b) for W-2 form requirements and documentation that may be
      used in lieu of a W-2 form (e.g., year-end YTD paystub). (ii) Additional fluctuating
      employment earnings (e.g., bonus, commission, overtime, tips, unemployment)
      For the purposes of determining stable monthly income, additional fluctuating
      employment earnings are considered to be earnings that fluctuate on a regular
      basis, often based on factors such as hours, job type and performance. Fluctuating
      earnings may include, but are not limited to, income types such as commissions,
      overtime, bonus, tips, and unemployment compensation associated with seasonal
      employment. For additional fluctuating employment earnings to qualify the Borrower,
      the Seller must determine that the amount of income used to qualify the Borrower
      is stable and complies with the requirements below for each income type. All
      income must be expected to continue or have documented continuance for at least
      three years as described in this section. Freddie Mac Single-Family Seller/Servicer
      Guide Chapter 5303 As of 05/06/26 Page 5303-22 Income history and stability
      – requirements and guidance The stability of fluctuating income is primarily
      determined based on historical earnings, so it is imperative that a sufficient
      income history has been established. For this reason, most income types that
      fluctuate have a history requirement of two years. In certain instances, a shorter
      history may still be considered stable if the Seller provides sufficient supporting
      documentation justifying the determination of stability. When making this determination,
      the Seller must take into consideration factors such as income and/or employment
      characteristics and the overall layering of risk factors, including the Borrower’s
      demonstrated ability to repay obligations. The income history must be at least
      12 months. (A) Bonus, commission, overtime, tips (reported by the employer)
      Bonus, commission, overtime, tips (reported by the employer) Topic Stable monthly
      income requirements History of receipt Two years, consecutive Exception: A history
      of less than two years, but not less than one year, may be acceptable. Refer
      to income history and stability requirements and guidance in Section 5303.1(d)(ii),
      above. Continuance Must be likely to continue for at least the next three years
      Documentation All of the following: ■ YTD paystub(s) documenting all YTD earnings
      ■ W-2 forms1 for the most recent two calendar years ■ 10-day PCV Or all of the
      following: ■ Written VOE documenting all YTD earnings and the earnings for the
      most recent two calendar Freddie Mac Single-Family Seller/Servicer Guide Chapter
      5303 As of 05/06/26 Page 5303-23 Bonus, commission, overtime, tips (reported
      by the employer) Topic Stable monthly income requirements years ■ 10-day PCV
      General requirements for calculating income When calculating qualifying income,
      the Seller must: ■ Determine and consider the pay frequency (weekly, bi-weekly,
      semi-monthly, monthly, quarterly, annually) to accurately analyze and calculate
      the stable monthly income ■ Determine if the income trend is consistent, increasing
      or declining by comparing the YTD income to prior year(s) income and taking
      into consideration the length of receipt and degree of fluctuation ■ Evaluate
      the income trend and use the amount that is most likely to continue for the
      next three years ■ Ensure that all documentation in the Mortgage file supports
      the Seller’s income analysis and calculation Example (pay frequency): The Borrower
      received an annual bonus in February in both the prior year and current year
      as evidenced by the written VOE dated in March of the current year. The bonus
      amounts are consistent based on the income trend analysis. Because the bonus
      is paid on an annual basis, the amounts received in the current and prior year
      must be averaged over a 2-year period. It is inaccurate to average the prior
      year and YTD number of months on the income documentation (e.g., 15-month average).
      Calculation method and trend analysis Calculation method: consistent and increasing
      trends The Seller must average the most recent years and YTD income over the
      applicable number of months of required history and documentation. Freddie Mac
      Single-Family Seller/Servicer Guide Chapter 5303 As of 05/06/26 Page 5303-24
      Bonus, commission, overtime, tips (reported by the employer) Topic Stable monthly
      income requirements for consistent and increasing income trends Trend analysis:
      consistent and increasing trends Refer to the row labeled “Calculation method
      and trend analysis for consistent and increasing income trends” in the table
      for base fluctuating hourly earnings type in Section 5303.1(d)(i), above. Calculation:
      Excluding time periods based on a specific event unlikely to recur Calculation:
      Excluding time periods based on a specific event unlikely to recur In certain
      instances, income may be calculated using a shorter time period; however, the
      Seller must provide sufficient documentation supporting the months used in the
      calculation. When excluding a time period based on a specific event that is
      unlikely to recur, at least 12 months of stable monthly income must still be
      used in the calculation. These 12 months do not need to be consecutive (i.e.,
      the period impacted by the non-recurring event can be excluded). Example: The
      Borrower has a 10-year employment history as a server earning tips. The June
      2025 YTD paystub, 2024 W-2 and 2023 W-2 have been provided. While the June 2025
      YTD paystub and 2024 W-2 earnings support approximately $60,000 in tip income
      per year, the 2023 W-2 earnings appear low at $30,000. Documentation in the
      file verifies that the restaurant was closed for renovations from April through
      September of 2023, which supports the reduced tip income, so it is reasonable
      to exclude the 2023 earnings from the calculation and average the most recent
      18 months of income. Documented income breakdown Documented income breakdown
      (e.g., bonus, overtime, commissions) A documented breakdown between the base
      non-fluctuating earnings or base fluctuating hourly earnings and the additional
      fluctuating employment earnings (e.g., bonus, overtime, commission, Freddie
      Mac Single-Family Seller/Servicer Guide Chapter 5303 As of 05/06/26 Page 5303-25
      Bonus, commission, overtime, tips (reported by the employer) Topic Stable monthly
      income requirements tips) ensures the most accurate analysis and calculation
      of stable monthly income. While a documented breakdown is not always required,
      one may be used to support a higher amount of qualifying income, verify bonus
      pay frequency, and/or support fluctuating income when the degree of fluctuation
      exceeds 10%. Verification method: Use employed income documentation outlined
      in Chapter 5302 such as written VOEs and/or year-end and current YTD paystubs
      that show the breakdown between the earnings type and additional employment
      earnings (e.g., overtime, bonus, commissions). Calculation method and trend
      analysis for declining trends Calculation method and trend analysis: declining
      trend Refer to the row labeled “Calculation method and trend analysis for declining
      trends” in the table for base fluctuating hourly earnings type in Section 5303.1(d)(i),
      above. 1 Refer to Section 5302.2(b) for W-2 form requirements and documentation
      that may be used in lieu of a W-2 form (e.g., year-end YTD paystub). Freddie
      Mac Single-Family Seller/Servicer Guide Chapter 5303 As of 05/06/26 Page 5303-26
      (B) Tip income – cash and charge tips reported on Internal Revenue Service (IRS)
      Form 4137 Tip income – Cash and charge tips reported on IRS Form 4137 Topic
      Stable monthly income requirements History of receipt Two years, consecutive
      Exception: A history of less than two years, but not less than one year, may
      be acceptable. Refer to income history and stability requirements and guidance
      in Section 5303.1(d)(ii), above. Continuance Must be likely to continue for
      at least the next three years Documentation The Mortgage file must contain all
      of the following: ■ IRS Form 4137 for the most recent two years ■ Complete federal
      individual income tax returns covering the most recent two-year period ■ 10-day
      PCV Calculation Refer to requirements for calculating income in the table for
      bonus, commission, overtime and tips in Section 5303.1(d)(ii)(A), above. Freddie
      Mac Single-Family Seller/Servicer Guide Chapter 5303 As of 05/06/26 Page 5303-27
      (C) Unemployment compensation associated with seasonal employment Unemployment
      compensation associated with seasonal employment Topic Stable monthly income
      requirements History of receipt Two years, consecutive Exception: A history
      of less than two years, but not less than one year, may be acceptable. Refer
      to income history and stability requirements and guidance in Section 5303.1(d)(ii),
      above. Continuance Must be likely to continue for at least the next three years
      Documentation Proof of receipt of unemployment compensation for the most recent
      two-year period (e.g., IRS Form 1099-G(s) and/or equivalent documentation) Calculation
      Refer to requirements for calculating income in the table for bonus, commission,
      overtime and tips in Section 5303.1(d)(ii)(A), above. (D) Restricted stock (RS)
      and restricted stock units (RSUs) (I) RS and RSU subject to performance- based
      vesting provisions Performance-based RS and RSU are RS or RSU with a vesting
      schedule contingent on corporate and/or individual performance. Freddie Mac
      Single-Family Seller/Servicer Guide Chapter 5303 As of 05/06/26 Page 5303-28
      RS and RSU subject to performance-based vesting provisions Topic Stable monthly
      income requirements History of receipt ■ Two years, consecutive Exception: A
      history of less than two years, but not less than one year, may be acceptable.
      Refer to income history and stability requirements and guidance in Section 5303.1(d)(ii),
      above. ■ To be considered for history of receipt, RS and RSU used for qualifying
      must have vested and been distributed to the Borrower from their current employer,
      without restriction Continuance Must be likely to continue for at least the
      next three years Documentation All of the following: ■ YTD paystub(s) documenting
      all YTD earnings, including payout(s) of RS or RSU ■ W-2 forms1 for the most
      recent two calendar years ■ 10-day PCV Or all of the following: ■ Written VOE
      documenting all YTD earnings (including payout(s) of RS or RSU) as well as earnings
      for the most recent two calendar years ■ 10-day PCV Employment and income verifications
      obtained through a third-party verification service provider as described in
      Section 5302.3 are permitted, provided that the documentation clearly identifies
      and distinguishes the payout(s) of RS/RSU. The Mortgage file must also include
      the following additional documentation: Freddie Mac Single-Family Seller/Servicer
      Guide Chapter 5303 As of 05/06/26 Page 5303-29 RS and RSU subject to performance-based
      vesting provisions Topic Stable monthly income requirements ■ Evidence the stock
      is publicly traded ■ Documentation verifying that the vesting provisions are
      performance-based (e.g., RS and/or RSU agreement, offer letter) ■ Vesting schedule(s)
      currently in effect detailing past and future vesting ■ Evidence of receipt
      of previous year(s) payout(s) of RS/RSU (e.g., year-end paystub, employer-provided
      statement paired with a brokerage or bank statement showing transfer of shares
      or funds) that must, at a minimum, include the number of vested shares or its
      cash equivalent distributed to the Borrower (pre-tax) ■ Documentation of the
      200-day simple moving average stock price Calculation Based on the form in which
      vested RS or RSU are distributed to the Borrower (i.e., as shares or its cash
      equivalent), the Seller must use the applicable method(s) below to calculate
      the monthly income: ■ RS or RSU distributed as shares Multiply the documented
      200-day simple moving average stock price by the total number of vested shares
      distributed (pre-tax) to the Borrower in the past two years, then divide by
      24. Example: If 200 vested shares were distributed (pre-tax) in the past two
      years and the documented 200-day simple moving average stock price is $10, multiply
      200 x $10 then divide by 24= $83.33 monthly income. ■ RS or RSU distributed
      as cash equivalent Use the total dollar amount distributed (pre-tax) from the
      cash equivalent of vested shares in the past two years and divide by 24. Freddie
      Mac Single-Family Seller/Servicer Guide Chapter 5303 As of 05/06/26 Page 5303-30
      RS and RSU subject to performance-based vesting provisions Topic Stable monthly
      income requirements Exception: If the Borrower has not received the RS or RSU
      income from their current employer for a full 24 months, the Seller may calculate
      the monthly income using the actual number of months received if supported by
      documenting compensating factors (e.g., a history of receipt of RS or RSU income
      for the previous five years from a prior employer). In all cases, the Borrower
      must have a minimum history of receipt of 12 months with their current employer,
      as specified above, and the calculated monthly income used for qualifying may
      not be based on less than 12 months. 1 Refer to Section 5302.2(b) for W-2 form
      requirements and documentation that may be used in lieu of a W-2 form (e.g.,
      year-end YTD paystub). (II) RS and RSU subject to time-based vesting provisions
      Time-based RS and RSU are RS or RSU with a pre-determined vesting schedule contingent
      only on the Borrower’s continued employment. RS and RSU subject to time-based
      vesting provisions Topic Stable monthly income requirements History of receipt
      ■ One year ■ To be considered for history of receipt, RS and RSU used for qualifying
      must have vested and been distributed to the Borrower from their current employer,
      without restriction Continuance Recurring awards must be likely to continue
      for at least the next three years. Freddie Mac Single-Family Seller/Servicer
      Guide Chapter 5303 As of 05/06/26 Page 5303-31 RS and RSU subject to time-based
      vesting provisions Topic Stable monthly income requirements Nonrecurring awards
      (e.g., a one-time award) must have at least three years’ vesting and distribution
      remaining on the vesting schedule from the Application Received Date. Documentation
      All of the following: ■ YTD paystub(s) documenting all YTD earnings, including
      payout(s) of RS or RSU ■ W-2 form1 for the most recent calendar year ■ 10-day
      PCV Or all of the following: ■ Written VOE documenting all YTD earnings (including
      payout(s) of RS or RSU) as well as earnings for the most recent calendar year
      ■ 10-day PCV Employment and income verifications obtained through a third-party
      verification service provider as described in Section 5302.3 are permitted,
      provided that the documentation clearly identifies and distinguishes the payout(s)
      of RS/RSU. The Mortgage file must also include the following additional documentation:
      ■ Evidence the stock is publicly traded ■ Documentation verifying that the vesting
      provisions are time-based (e.g., RS and/or RSU agreement, offer letter) ■ Vesting
      schedule(s) currently in effect detailing past and future vesting ■ Evidence
      of receipt of previous year’s payout(s) of RS/RSU (e.g., year-end paystub, employer-provided
      statement paired with a brokerage or bank statement showing transfer of shares
      or funds) that must, at a minimum, include the number of vested shares or its
      Freddie Mac Single-Family Seller/Servicer Guide Chapter 5303 As of 05/06/26
      Page 5303-32 RS and RSU subject to time-based vesting provisions Topic Stable
      monthly income requirements cash equivalent distributed to the Borrower (pre-tax)
      ■ Documentation of the 200-day simple moving average stock price Calculation
      Based on the form in which vested RS or RSU are distributed to the Borrower
      (i.e., as shares or its cash equivalent), the Seller must use the applicable
      method(s) below to calculate the monthly income: ■ RS or RSU distributed as
      shares Multiply the documented 200-day simple moving average stock price by
      the number of vested shares distributed (pre-tax) to the Borrower in the past
      year, then divide by 12. Example: If 50 vested shares were distributed (pre-tax)
      in the past year and the documented 200-day simple moving average stock price
      is $10, multiply 50 x $10 then divide by 12 = $41.67 monthly income. ■ RS or
      RSU distributed as cash equivalent Use the total dollar amount distributed (pre-tax)
      from the cash equivalent of vested shares in the past year and divide by 12.
      1 Refer to Section 5302.2(b) for W-2 form requirements and documentation that
      may be used in lieu of a W-2 form (e.g., year-end YTD paystub). (e) Employment/income
      characteristics requirements and guidance For all employment and/or income characteristics
      below, the Seller must determine whether the employment and/or income represents
      primary or secondary employment and/or income and use the applicable requirements
      for history, continuance, earnings type, documentation and calculation in this
      chapter and in conjunction with Chapters 5301 and 5302, unless specifically
      stated otherwise. For certain employment and/or income characteristics, additional
      documentation and/or analysis may be needed, as described below. Freddie Mac
      Single-Family Seller/Servicer Guide Chapter 5303 As of 05/06/26 Page 5303-33
      Employment/income characteristics Additional requirements Full-time and part-
      time employment Full-time and part-time employment may be either primary or
      secondary employment, and may consist of base non-fluctuating earnings, base
      fluctuating hourly earnings and/or additional employment earnings. None Seasonal
      employment Seasonal employment may be primary employment (e.g., highway construction
      and road work in colder regions) or secondary employment (e.g., educators teaching
      summer school). The earnings may include base non-fluctuating earnings, base
      fluctuating hourly earnings and/or additional employment earnings. When using
      unemployment income associated with the seasonal employment as stable monthly
      income: ■ A documented two-year history of seasonal employment and income receipt
      is required, and ■ The requirements for unemployment income associated with
      seasonal employment in Section 5303.1(d)(ii)(C) must be met Freddie Mac Single-Family
      Seller/Servicer Guide Chapter 5303 As of 05/06/26 Page 5303-34 Employment/income
      characteristics Additional requirements Union members Certain union members
      may work in industries where they may switch employers frequently and the union
      facilitates the next position. In that case, the Borrower may have multiple
      YTD paystubs and W-2s, all of which can be used for the verification and calculation
      of stable monthly income. The Borrower’s earnings may be comprised of base non-fluctuating
      earnings, base fluctuating hourly earnings and/or additional employment earnings.
      A Borrower may exhibit a stable and consistent employment and income history,
      regardless of the number of employers. The Borrower may or may not be in between
      employers at the time of closing. If the Seller determines that the Borrower’s
      employment and income history is stable and it is documented that the Borrower
      has multiple jobs as described above, it may be acceptable to obtain the 10-day
      PCV (refer to Section 5302.2(d)) from the union. The Seller must make this determination
      based on a review of all employment None Freddie Mac Single-Family Seller/Servicer
      Guide Chapter 5303 As of 05/06/26 Page 5303-35 Employment/income characteristics
      Additional requirements and income characteristics. Borrower employed by a family
      member or by the property seller, real estate broker or other interested party
      to the transaction When a Borrower is employed by a family member or by an interested
      party to the transaction, the employment and income is not arm’s length. Due
      to the increased layering of risk inherent in non-arm’s length employment, additional
      third-party validation supporting the current income level is necessary. Complete
      signed federal individual income tax return or IRS wage and income transcripts
      for the most recent year. This documentation must validate the prior year earnings
      from current employment and support the current income level. If the current
      income level is not supported, the Seller may use the validated income amount
      from the prior year as qualifying income. Employed income from a foreign source
      When a Borrower receives employed income from a foreign source, the income may
      be considered for qualifying income if the income is reported on the Borrower’s
      U.S. federal individual income tax return for the most recent year, in addition
      to meeting the requirements in this chapter. Refer to Chapter 5305 for all other
      non-employment/non-self-employment income from a foreign source. Complete signed
      U.S. federal individual income tax return for the most recent year Freddie Mac
      Single-Family Seller/Servicer Guide Chapter 5303 As of 05/06/26 Page 5303-36
      Employment/income characteristics Additional requirements Employment contracts
      Employment contracts in the educational industry: It is common for Borrowers
      who work in the educational industry, such as teachers, to be employed under
      renewable or term employment contracts. For the educational field, if the Borrower
      provides an annually renewable or term contract, it is reasonable to consider
      continuance of receipt, provided the Seller does not have knowledge or documentation
      to the contrary. None Employment contracts in other industries: If an employment
      contract is provided, it may be considered for the purposes of determining stable
      monthly income. When making the determination of employment history, income
      stability and the monthly income amount, the Seller must take into consideration
      factors such as the following: ■ Whether employment contracts are reasonably
      common to the particular employment field and/or A documented two-year history
      of income and employment in the same or a similar employment field or industry
      when the terms of the employment contract do not include a base non-fluctuating
      pay structure Freddie Mac Single-Family Seller/Servicer Guide Chapter 5303 As
      of 05/06/26 Page 5303-37 Employment/income characteristics Additional requirements
      region ■ The pay structure outlined within the terms of the contract ■ Whether
      the Borrower has demonstrated the ability to maintain consistent employment
      and income with this form or a similar form of pay structure over the most recent
      two years Temporary help services employment Some contract firms and temporary
      staffing firms contract out the services of their employees to other employers.
      When making the determination of employment history, income stability and the
      monthly income amount, the Seller must take into consideration factors such
      as whether the Borrower has demonstrated the ability to maintain steady and
      continuous employment and income with this employment structure over the most
      recent two-year period. W-2 forms from the contract and/or temporary staffing
      firm for the most recent two-year period Income reported on IRS Form 1099 for
      services performed At times, Borrowers receive IRS Form 1099(s) for services
      performed; this pay structure is often referred to in terms such as contractor
      or contingent worker. Minimum documentation – all of the following: ■ All IRS
      Form 1099s for services performed for the most recent two-year period, and ■
      YTD paystubs and/or other equivalent and reasonably reliable third-party documentation
      (e.g., YTD Freddie Mac Single-Family Seller/Servicer Guide Chapter 5303 As of
      05/06/26 Page 5303-38 Employment/income characteristics Additional requirements
      Income received on IRS Form 1099 for services performed may be reported on Schedule
      C and may represent a sole proprietorship. The Seller must treat this income
      as either: ■ Self-employed income in accordance with the requirements and guidance
      in Chapter 5304, OR ■ Non-self-employed income in accordance with the requirements
      in this section if the IRS Schedule C from the most recent calendar year tax
      return evidences all of the following: ❑ Gross receipts or sales = total amount(s)
      reported on the IRS Form 1099(s) ❑ Total expenses are < 5% of gross receipts
      or sales, after deducting non-cash expenses (e.g., depreciation) ❑ Cost of goods
      sold = $0 ❑ 12-month history of 1099 income and reported expenses is present
      Exception: If the above expense factor is not met but expenses are within a
      earnings statements or evidence of payments for services performed) documenting
      YTD income received by the Borrower ■ Pages 1 and 2 of the Borrower’s federal
      individual income tax returns, and the applicable schedules (i.e., Schedule
      C, Schedule 1), covering the most recent one-year period History of receipt:
      Most recent two years; however, in certain instances, a shorter history of income
      with this pay structure may still be considered stable if the Seller provides
      a written analysis and sufficient supporting documentation justifying the determination
      of stability (e.g., a prior history of employment earnings at a similar level).
      In no event may the history of receipt for this pay structure documented on
      the tax returns be less than 12 months. Continuance: Must be likely to continue
      for at least the next three years Calculation: Average must be based on the
      required and documented history of receipt and support a consistent level of
      income in accordance with the requirements of Section 5301.1(c). The 1099 income
      must be reduced by the expenses (excluding non-cash items) reported on Schedule
      C. Apply an average of the verified expenses to the 1099 income without verified
      expenses. Calculation example Scenario: Borrower has an 18-month history of
      Freddie Mac Single-Family Seller/Servicer Guide Chapter 5303 As of 05/06/26
      Page 5303-39 Employment/income characteristics Additional requirements close
      range (e.g., 6%), the Seller may perform additional analysis to determine whether
      income reported on Schedule C remains characteristic of non-self-employed income.
      Factors the Seller may consider when making this determination include, but
      are not limited to: ■ The principal business or profession, ■ Gross receipts
      or sales, ■ Cost of goods sold, and ■ The type and level of expenses reported
      If the Seller determines that the Borrower is a sole proprietor, refer to the
      self-employed income requirements and guidance in Chapter 5304. documented 1099
      income, with 12 months of income and expenses reflected on the most recent Schedule
      C and reasonably reliable verification of YTD income for the most recent 6 months.
      Prior employment (W-2) for 5 years with similar income level and employment
      field. 1099(s) reported as gross receipts/sales: (+) $100,000 Less: Schedule
      C Expenses (less non-cash expenses) (-) $4,000 (4%) Subtotal (most recent year
      Schedule C) $96,000 Verified YTD 1099 income (6 months): (+) $50,000 Less: 4%
      expense rate (based on most recent year Schedule C) (-) $2,000 (4%) Subtotal
      (Current YTD) $48,000 Income calculation: $144,000 (combined subtotals) / 18
      months $8,000/month Stable monthly income: The Seller must determine if more
      information and/or documentation is needed to support and justify the stable
      monthly income based on Freddie Mac Single-Family Seller/Servicer Guide Chapter
      5303 As of 05/06/26 Page 5303-40 Employment/income characteristics Additional
      requirements the individual circumstances. Pre-closing verification: Sellers
      are encouraged to complete a pre-closing verification confirming that the Borrower
      continues to perform services for the provider(s) of the 1099 income as close
      to the Note Date as possible. Borrowers with business ownership interest(s)
      less than 25% For use of ordinary income (loss) or guaranteed payments for services
      reported on IRS Schedule K-1 as stable monthly qualifying income, the Seller
      must meet either: ■ The self-employed requirements in Chapter 5304, or ■ All
      requirements in this section in conjunction with the general requirements and
      guidance in Section 5301.1 and Chapter 5302 The Borrower should not have an
      ownership interest of 25% or more in any business. When using ordinary business
      income for qualification, the historical cash distributions must be reasonably
      consistent with the ordinary business income reported on the K-1s. Note: For
      use of W-2 income, the Seller must meet the requirements of this chapter or
      Chapter 5304 for self- Schedule K-1 income from partnerships and S corporations
      Minimum documentation – all of the following: ■ Schedule K-1s for the most recent
      two calendar years for partnerships and S corporations ■ Documentation of all
      YTD income must be obtained if available (e.g., most recent YTD paystub or equivalent).
      If YTD information is not attainable (e.g., due to year-end payment structures),
      the Seller may document and justify the income stability without this information.
      ■ The Schedule K-1(s) must evidence less than 25% ownership interest for the
      individual Borrower ■ Verification of current existence of business in accordance
      with Section 5304.1(m) History of receipt: ■ Ordinary business income: Most
      recent two years ■ Guaranteed payments for services: Most recent two years;
      however, in certain instances, a shorter history may still be considered stable
      if the Seller provides a Freddie Mac Single-Family Seller/Servicer Guide Chapter
      5303 As of 05/06/26 Page 5303-41 Employment/income characteristics Additional
      requirements employed income; the additional requirements in this row do not
      apply. written analysis and sufficient supporting documentation justifying the
      determination of stability (e.g., recently changed from an employee of the same
      firm to a partner with a nominal ownership interest). In no event may the history
      be less than 12 months. Continuance: Must be likely to continue for at least
      the next three years Calculation: Average must be based on the required and
      documented history of receipt and support a consistent level of income in accordance
      with the requirements of Section 5301.1(c). Stable monthly income: The Seller
      must determine if more information and/or documentation is needed to support
      and justify the stable monthly income based on the individual circumstances.'
  judgment: false
