Income Qualification Calculator
Calculate qualifying monthly income per Fannie Mae guidelines. Select income types, enter tax return line items, and get UW-ready qualifying amounts.
Select an income type above to begin calculating qualifying income.
Total Qualifying Income
Income Sources
Quick DTI Estimator
About the Income Qualification Calculator
This calculator helps loan officers determine qualifying monthly income for mortgage borrowers using Fannie Mae Selling Guide methodology. Each income type follows the exact IRS form line references and add-back rules that underwriters use when analyzing tax returns on the Fannie Mae 1084/1088 income analysis worksheet. You can combine multiple income sources — including W-2 base salary (with optional pay increase toggle), self-employment income from Schedule C, S-Corp, or C-Corp, rental income from Schedule E, RSU stock compensation, variable income like bonuses and commissions, and retirement income with non-taxable gross-up — to arrive at a total qualifying monthly income figure. The calculator flags declining income trends, shows step-by-step math for each source, and builds a master required documents checklist aggregating everything your UW will need across all income sources. Use the Quick DTI Estimator to see how the qualifying income translates to debt-to-income ratios and maximum housing payments.
Frequently Asked Questions
How do underwriters calculate self-employment income?
Underwriters use the borrower's most recent two years of federal tax returns. For sole proprietors (Schedule C), they take the net profit from Line 31 and add back non-cash expenses like depreciation (Line 13), depletion (Line 12), and business use of home (Line 30). For S-Corp owners, they combine W-2 wages from the corporation with the proportional Schedule K-1 ordinary income plus depreciation add-backs at the borrower's ownership percentage. The two adjusted years are averaged and divided by 24 to produce a monthly qualifying amount. If income is declining year-over-year, the underwriter may use the lower year or require compensating factors.
How is rental income from Schedule E calculated for mortgage qualification?
For properties already on tax returns, underwriters take gross rents received (Schedule E, Line 3), subtract total expenses (Line 21), then add back depreciation (Line 20). This adjusted net is averaged over two years and divided by 24 for a monthly figure. The result is compared to the full monthly PITIA for that property. If the net rental income exceeds the PITIA, the surplus counts as qualifying income. If it falls short, the difference is treated as a monthly debt obligation. For newly acquired properties, lenders use 75% of gross market rent from the appraisal or lease, then subtract the full PITIA.
Can non-taxable income like Social Security be grossed up?
Yes. Per Fannie Mae guidelines (B3-3.1-09), non-taxable income such as Social Security, SSDI, VA disability benefits, and certain pension payments can be grossed up by 25% or the borrower's actual marginal tax rate, whichever is lower. For example, a borrower receiving $2,000 per month in non-taxable VA disability income could qualify with $2,500 per month. Documentation such as an award letter, SSA-1099, 1099-R, or VA benefit letter confirming the amount and continuance for at least three years is required.
What is the difference between how S-Corp and C-Corp income is qualified?
S-Corp income flows through to the borrower via Schedule K-1, so underwriters combine W-2 wages from the S-Corp with the proportional share of ordinary business income from K-1 Line 1, plus depreciation and amortization add-backs at the ownership percentage. C-Corp income does not flow through — retained corporate earnings stay with the business. For C-Corp owners, qualifying income is limited to W-2 wages plus documented recurring dividends. The underwriter also performs a business cash flow analysis on Form 1120 to verify the corporation generates enough cash to sustain the borrower's salary.
Important Disclosures: Studio 1003 is a technology platform, not a lender, broker, or financial advisor. This tool is provided for informational and educational purposes only and does not constitute a commitment to lend, pre-approval, or loan offer. FHA and VA rates shown are estimated based on current market data and may differ from actual lender rates. Property taxes, insurance, and closing cost estimates are approximations based on state and county averages and may vary. Final loan eligibility, terms, and costs are subject to underwriting approval and official disclosures. APR and closing cost figures will be finalized on your official Loan Estimate and Closing Disclosure. Always consult with a licensed mortgage professional before making financial decisions.