B3-3.1-04, Commission Income
This section talks about how to confirm a person’s commission income.
Verification of Commission Income
When someone’s income comes from commissions, there are specific rules to confirm it.
The best scenario is when the person has been earning commission income for at least two years. But, it’s not a hard rule. If someone has been earning commission for somewhere between 12 and 24 months, that can still work. There needs to be good reasons to make up for the shorter income history though.
To document this commission income, you need one of two things:
– A completed Request for Verification of Employment (Form 1005), or
– The borrower’s latest paystub and IRS W-2 forms for the past two years.
The lender will also need to verbally confirm the borrower’s employment. This is called a verbal VOE (Verification of Employment). For what specifically needs to be done in a verbal VOE, refer to B3-3.1-07, Verbal Verification of Employment.
For more information about how to calculate variable income, like commission, refer to B3-3.1-01, General Income Information.
For more on how to confirm employment income, refer to B3-3.1-02, Standards for Employment Documentation.
Just to clarify, there haven’t been any recent announcements related to this topic.
If you have any questions about these policies or guidelines, you can get answers directly from the source.
References
For more details, visit Commission Income of the Fannie Mae Selling Guide.