SELF EMPLOYED BORROWERS

Here is how Fannie/Freddie are Calculating self-employment income on or after June 11, 2020 and until further notice:

• An unaudited year-to-date (YTD) profit and loss statement covering the most recent month preceding the Application Date and

• Two months business account statements no older than the latest two months represented on the YTD profit and loss statement [personal asset account statements evidencing business deposits and expenses may be used when the Borrower is an owner of a small business and does not have a separate business account]

OR

• An audited YTD profit and loss statement reporting business revenue (i.e., gross receipts or sales), expenses and net income. The information in the YTD profit and loss statement must cover the most recent month preceding the Application Received Date.

• If the unaudited YTD profit and loss statement cannot be supported by business account statements and the income is declining and has not stabilized the self-employment income is not eligible for use in qualifying.

• If the income has stabilized use no more than the current level of stable monthly self-employment income. 

Lenders must consider pandemic-related factors and Loan proceeds from the SBA Payroll Protection Plan (PPP) and/or any other similar COVID-19-related program(s) (e.g., federal, State or local level business loans and grants) are not considered business assets or income.