Start Up Program Eligibility Income Worksheet COVID-19 Income

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Start Up Program Eligibility Income Worksheet COVID-19 Income

Transcript Of Start Up Program Eligibility Income Worksheet COVID-19 Income

Start Up Program Eligibility Income Worksheet COVID-19 Income Guidance Coversheet

ATTENTION: Use this chart to determine how to count temporary COVID-19 related income types/changes when calculating borrower(s) program eligibility income.

INCOME TYPE
Economic Impact (Stimulus) Payment
Child Tax Credit
CARES Act/American Rescue Plan Act $300/week additional federal unemployment benefit (ended 9.6.21)

INCLUDE IN ELIGIBILITY
INCOME
No

PROGRAM ELIGIBILITY INCOME Guidance
NOTE: Does not count toward DPL Asset Limit

No

Do not include refundable tax credits

Yes

QUALIFYING INCOME Guidance
Follow Industry Standard and Product Guidelines

Borrowers are no longer receiving this payment as of 09/06/2021. Do not include.

State unemployment benefits (non-seasonal)
Reduced pay as a result of the pandemic (e.g. reduced hours, reduced wage/salary)
Increased pay as a result of the pandemic (e.g. hazard pay, increased hours, etc.)

Yes Varies

Include income at current level.
Include income at current level, unless employer provided written notice of an end date to the additional pay that is within three months of the closing date. In that case, exclude the additional income.

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Cover Sheet

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Start Up Program Eligibility Income Worksheet
What You Need to Know:
• Document your calculations so Minnesota Housing staff can understand how you arrived at the total Program Eligibility Income.
• Each loan file will have two income calculations: o For qualifying income, follow industry standard documentation and calculation requirements. o For program eligibility income, provide documents dated within four months of the closing date to support your calculations. Within those four months, use the most recent information available.
• Questions? Have your underwriter contact the Partner Solutions Team at 651.296.8215.

Include income from the following people: • A person who will have title to the property and will sign the mortgage. (i.e. a borrower) • A person expected both to live in the residence being financed and is a legal spouse of a borrower. • A person expected both to live in the residence being financed and to sign or guarantee the
mortgage note. (i.e. an occupant co-signer).

Choose the applicable income type (s) and use page 2 to show your calculation:

• Base Pay from an Employer

• Insurance or Benefit Payments

• Additional Income from an Employer

• Investment Property Net Rental Income

• Employee Allowances

• Child/Spousal Support

• Self-Employment/Business Income

• Regular Cash Contributions

• Income from Financial Assets

• Custodial Account Income

• Government Transfer Payments

• Other Sources of Income

INCOM E TYPES

Include the individuals in the household who meet one of the above definitions
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Subtotal
Total Annual Program Eligibility Income Compare with Start Up program income limits

Annual Program Eligibility Income

Person A

Person B

Person C

Enter Name

Enter Name

Enter Name

$

$

$

$

$

$

$

$

$

$

$

$

$ 0.00

$ 0.00

$ 0

$ 0.00

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Program Eligibility Income Calculation and Notes – include ALL income type(s) for all person (A to C) on page 1 Show ALL program eligibility income calculation here with notes as applicable:

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Calculating Program Eligibility Income:
When calculating Program Eligibility Income, there are two types of income to consider – income from an employer and income from all other sources. Include all income unless specifically listed as excluded on this worksheet.

1. Calculating Income from an Employer
Determine whether the borrower receives base pay only or a combination of base pay and additional income from an employer. Ask employer for clarification if the Borrower has not been on the job long enough to establish a history.

Calculate Base Pay from an Employer
Base Pay from an Employer
Definition/Inclusions
Regular Hours/Pay: Borrower is scheduled for the same number of hours per pay period. Gross salary or wage income from part-time, full-time, or seasonal work with regular hours/pay
Irregular Hours/Pay: Variable hours, seasonal work, etc., such as nursing, restaurant, construction, retail or part-time work with varied hours or pay.

Exclusions
• Income no longer available • Income not yet earned (i.e. future
bonus or expected raise)

Guidance
• Determine whether base pay is regular hours/pay or irregular hours/pay and follow calculation instructions on page 3 and 4.
• Borrowers can't manipulate income (quit job, etc.) to become eligible. • Include all income, including sick, holiday and vacation pay. • Income documentation is required, and could include, but is not limited, to, paystubs, VOE, tax returns,
W-2’s, etc. • Seasonal work requires the same documentation as “Base Pay from an Employer, irregular hours/pay,”
but should also include any unemployment benefits, if applicable. • 1099s, tax returns, and/or verification from unemployment office to verify unemployment benefits.

Regular Hours/Pay
1. Determine frequency of income - weekly, bi-weekly, semi-monthly, etc. 2. Identify documentation needed to support payment frequency and calculation. 3. Apply Calculation - (Base Wage x Hours Worked in a Pay Period) x (# of Pay Periods Per Year) 4. This should approximate the annualized YTD on VOE or paystubs. If not, check for additional pay, such as
overtime, bonus, shift differential, etc. (Employers don't always break this out on the VOE). 5. Don’t double count by adding sick, vacation, and holiday earnings. 6. See “Calculate Additional Pay from an Employer” below.

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Hourly pay
Multiply the pay per hour by the number of hours worked per week. Multiply total by 52 weeks a year.
Example: 1. $15 per hour x 40 hours a week = $600 2. $600 x 52 weeks a year = $31,200 3. $31,200/12 = $2,600 gross monthly
base pay

Bi-weekly pay
Multiply the bi-weekly pay by 26.
Example: 1. $1,200 every two weeks x 26
pay periods a year = $31,200 2. $31,200/12 months = $2,600
gross monthly base pay

Semi-Monthly pay
Multiply the semi-monthly pay by 24.
Example: 1. $1,300 semi-monthly pay x 24
pay periods a year = $31,200 2. $31,200/12 months = $2,600
gross monthly base pay

Irregular Hours/Pay
1. Add YTD Earnings total and prior year’s earnings total, if available. If using a different timeframe, the underwriter should provide documentation and an explanation to support using a different timeframe.
2. To annualize, divide the resulting amount by the number of months and days worked, and then multiply that number by 12 months to get total average pay from an employer.

Calculate Additional Pay from an Employer

Additional Income from an Employer

Definition/Inclusions

Exclusions

Income over and above base pay, such as overtime, shift differential, bonuses, profit-sharing, tips, commissions, etc. Income is counted regardless of the currency in which it is paid (i.e. U.S. Dollars or virtual currency).

One-time (non-recurring) income; i.e. income received once that does not have a history and is unlikely to reoccur in the future, employer provides written notice additional pay is ending.

Guidance

• Documentation of additional pay could include, but is not limited to, paystubs, VOE, etc.

• Always use an average for overtime (unless employer and income history verifies OT was for one-time, special project, etc.), commissions, bonuses, shift differentials, and sick/vacation/holiday pay (if not already included in base pay).

• Include all income that is included in the YTD Earnings Total on a paystub or on a VOE. Any income that is not included in YTD Earnings Total does not have to be included in the Program Eligibility Income calculation.

• Virtual currency as compensation for services: Calculate as you would with other income, with frequency documented. For such calculations, use the fair market value of the virtual currency on the date received. Virtual currency documentation may include but is not limited to printouts or screenshots of virtual wallets, ledgers, receipts, etc. Virtual currency income from an employer is included in “Wages, tips, other compensation” reported on Form W-2.

1. Review the earnings section of paystub or VOE and add up all additional income that is included in the YTD earning total and not included in base pay. (Sick, vacation, holiday, etc. are generally included in base pay.)
2. Add YTD additional pay total and prior year’s additional pay, if available on a VOE. If using a different
timeframe, the underwriter should provide documentation and an explanation to support using a different
timeframe.
3. To annualize, divide the resulting amount by the number of months and days worked, and then multiply that amount by 12 months to get an average of Additional Pay from an Employer.

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2. Calculating Income from Other Sources Determine if there are other sources of income, apart from wages from an employer. Types of Income

Employee Allowances

Definition/Inclusions
Housing, car, cell phone, per diems, etc.

Exclusions
• Reimbursements for specific employee business expenses, such as mileage reimbursements for a business trip

Guidance
• Include all allowances, per diems or stipends as income.
• Include job-related unreimbursed expenses (i.e., union dues, computer/phone purchase, supplies needed, required training, etc). These expenses cannot be deducted from eligibility income.

Self-Employment/Business Income

Definition/Inclusions
Individuals who earn their income through conducting a trade or business that they directly operate instead of working for an employer who pays them a salary or a wage.

Guidance
• Determine gross annual income. • Use a two-year average from the most recent federal income tax returns,
if available. • Self-employment income documentation is required, and may include,
but is not limited, to: o Tax form Schedule C, most recent two years o Tax form Schedule K-1 (Form 1120S) o YTD Profit & Loss Statement
• Request additional supporting documentation (i.e. current balance sheet and income statement) when necessary (to support P&L or other income documentation).
• Deduct out-of-pocket business expenses such as office rent, telephone, etc., which are generally tax-deductible items.
• Include all entertainment and travel expenses, private retirement contribution plans, and property or equipment depreciation. These items are generally tax-deductible, but must be added back for the Program Eligibility Income calculation if starting with the net income amount.
• If a net loss, use $0. Do not subtract the loss from the Program Eligibility Income calculation.
• If using a different timeframe to better reflect the borrower’s current income, the underwriter should provide documentation and an explanation to support using a different timeframe.

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Income from Financial Assets

Definition/Inclusions
Income from: trusts, annuities, dividends, royalties, interest earned from nonretirement accounts (savings, checking, money market, investments, virtual currency, mutual funds, etc.), Certificate of deposit.

Exclusions • One-time lump sum
payments
• Distributions from investments in retirement accounts (IRA, VIP, 403(b), 401(k))
• Any cash withdraws from retirements accounts

Insurance or Benefit Payments

Definition/Inclusions Periodic payments derived from: • Long-term care
insurance • Disability insurance • Pensions • Death benefits

Exclusions
Do not include one-time, lumpsum payments.

Guidance • Always check tax returns for income
from financial assets (including virtual currency). • Include average of periodic payments, including recurring, lump-sum payments. • Where assets after closing exceed $5,000, calculate interest income based on the greater of actual income or imputed income based on the current passbook savings rate, as determined by HUD. • Additional guidance on virtual currency as an investment: Follow IRS guidance. See the IRS FAQs on Virtual Currency
Guidance Include periodic insurance or benefit payments at current level.

Government Transfer Payments

Definition/Inclusions
Government transfer payments involve payments for which no current services are performed and are a component of personal income.

• Retirement benefits • Disability benefits • Income maintenance
benefits • Pensions • Veterans benefits • Veterans Education
benefits

• Federal education & training assistance
• Public assistance • Worker's Compensation • Social Security benefits • Unemployment insurance
compensation

Exclusions
• Food stamps
• Government-paid child care paid directly to the provider
• Foster care income
• Section 8 vouchers
• Adoption Assistance/Subsidy for children with special needs

Guidance
• Include all sources of this income at current level. Do not gross up.

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Investment Property Net Rental Income

Definition/Inclusions Income from an Investment Property

Exclusions Potential roommate income or rental income of future duplex or accessory dwelling unit

Child/Spousal Support
Definition/Inclusions Child support, child care, medical support, alimony, spousal maintenance

Exclusions
Court-ordered support not received; must document support was not received

Regular Cash Contributions
Definition/Inclusions Regular cash contributions from nonresident(s)

Exclusions

Custodial Account Income

Definition/Inclusions
Unearned income paid to children age 20 or younger, who live with the Borrower(s) 50% of the time or more

Exclusions
• 529 plans
• Accounts where someone other than the parents are named as custodian.
• Unearned income of adult dependents age 21 or older

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Guidance Calculate investment property net rental income • Monthly Gross Rent - Vacancy Loss
= Gross Adjusted Rent • Gross Adjusted Rent – PITI and
maintenance costs = Net Rental Income. If rental income is negative, enter $0. In addition, an operating statement may be used in lieu of using the above-referenced formula.
Guidance • Use average of actual support
received. • Review divorce/child support
agreement. • Check with county social service
agency to determine whether any payment adjustments have been made since the original payment schedule. • Cross-check payment schedule with bank statements, etc. • Contact Partner Solutions if less than six months remain.
Guidance Check bank statements for regular cash contributions. Include all regular cash contributions from non-residents.
Guidance Include all custodial account income.
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Other Sources of Income
Definition/Inclusions
• Contract-for-deed interest income
• Any other sources of income as identified or represented in the loan file and applicable documentation.
• Gambling winnings (unless proof of one-time earning is provided); gambling losses cannot be deducted from winnings.

Exclusions
• Loans; scholarships; grants and tuition reimbursement;
• Earned Income Tax Credit refund payments; health insurance premium reimbursements (deducted from gross pay) and any out-ofpocket expense (copays, etc.) reimbursements
• One-time lump sum (non-reoccurring) payments from: o Inheritances o Insurance settlements o Lottery winnings o Gambling winnings o Capital gains o Liquidation of assets o Settlements for personal loss

Guidance
• Always include other sources of income not specifically excluded.
• For contract-for-deed interest income, include interest portion of payments per the terms of the agreement/contract.

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