Lender Guidelines: 2.2 Income Limitation
The income of the eligible borrower(s) must be less than or equal to the applicable Program maximum income limit. Note that the Program maximum income limits are significantly higher for homes located in Targeted Areas. The Maximum Family Income limits and the list of Targeted Areas are set forth on TSAHC’s website at https://www.tsahc.org/lenders/resources-for-lenders#Income_and_Guidelines and the Lender Portal at www.tsm-online.org.
For Non-Bond DPA (No MCC): For purposes of meeting the eligibility criteria, only the income of the mortgagor(s) will be considered. The income of a non-purchasing spouse (NPS) will not be included in the calculation. For example, only the income used to qualify the mortgagor for repayment of the mortgage loan (from the 1003 loan application and/or the applicable underwriting worksheet) will be compared against the program limits.
For Non-Bond DPA (with MCC), Bond DPA or MCC Only: For purposes of meeting the income eligibility criteria, income from all family members living in the home with an ownership interest is considered. Family income is calculated by taking the borrower’s current gross monthly income from all sources, as well as that of anyone else who is expected to live in the residence and become liable on the deed of trust (including a non-purchasing spouse) and multiplying that amount by 12.
The Lender uses one of two methods of computation depending on whether the borrower is employed or self-employed. Generally, family income for an employed person is computed by multiplying the current gross monthly income figure by twelve. Sporadic income should be averaged and added to that base figure for a total. Family income for a self-employed person is computed by annualizing the year-to-date total on a current profit and loss statement and averaging that amount with the net income figures from the two most recent years’ federal income tax returns (with depreciation added back in).
a. Sources of Income. The IRS requires that every source of income, taxed or untaxed, be included in the calculation of family income.
b. Prior Year Earnings. On some pay stubs the year-to-date earnings include pay from the last part of the prior year. In such circumstances, the borrower should request that the employer provide a signed statement of verification. Otherwise, the borrower may be deemed to exceed the maximum family income limits, due to an inflated average, and be disqualified.
Please refer to the Lender Guidelines: appendix- Income Guidelines for Borrowers Receiving Bond DPA or MCC
for more information about calculating income for MCC qualification purposes.
For access to the full TSAHC DPA & MCC Guidelines, please click here.