Fannie Mae Changes Cont: Expenses and Waitress Tips

September 19, 2015 Marc Edelstein Uncategorized 0 Comments

Presumably one of the worst parts about being a waitress or holding a job where a large some of the compensation is commission is the ability to get a mortgage. In the past going through the mortgage process while earning large sums commissions and tips has always included lots of yellow tape. Even the most accurate tax accounting didn’t solve many of the issues sales personnel and waitresses had with borrowing. Great news! The newest Fannie Mae regulatory changes have made getting a mortgage easier for these two groups. Lets talk about it.

Business Expenses:

For those of you that earn a nice commission check you know that along with a sales jobs come potentially lots of expenses. Some of which your employer does not reimburse for. As you know you can write these expenses off on your Tax-Return forms. These are deductions that are made from your taxable income. Previous to the new regulations this made for a tricky assignment with calculating your “qualifying income”. Well, not any more. The new Fannie Regulations state that borrowers using base pay, bonuses, overtime, and commission income totaling less than 25% of their annual income are not subject to deductions.

Isn’t this great news?

Tip Income:

As you know Fannie Mae has always allowed Tip Income to be included in a borrowers qualifying income if the lender can prove the income over two years. But, in many cases , especially the restaurant business employers may not include the full tip amount in respective documentation. Now with the new Fannie Mae guidelines a potential borrower can report additional tip income to the IRS using form 4137. Again, if the lender can prove the income over two years the newly reported tip income can be used as qualifying income.

This is fantastic!

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