Freddie Mac Income Calculator FAQ

The Freddie Mac Income Calculator online graphical user interface (GUI) and application programming interface (API) is for use by mortgage professionals, not by consumers or potential borrowers. Consumers or potential borrowers who are seeking a mortgage loan should contact a mortgage lender.

On the GUI, users will need to certify that they are a mortgage professional prior to gaining access. A definition of “mortgage professional” is provided on the Freddie Mac Income Calculator webpage.

The income calculator supports employed income (base, bonus, overtime, commission) and self-employed income with IRS business structures of Schedule C, 1120S and 1065. In addition, the income calculator can assess rental income reporting on IRS Form Schedule E and IRS Form 8825 through an 1120S or 1065.

See Single-Family Seller/Servicer Guide (Guide) Section 5303.4(b) for eligible employed income, Guide Section 5304.2(b) for eligible self-employed income and Guide Section 5306.2 for rental income. 

The calculator doesn’t assess military income, business income filed on fiscal year or income from businesses less than two years old. Sellers cannot use data from tax returns that are handwritten, amended or from a U.S. territory.

Yes, TPOs may use the calculator and results. The calculator identification number can be used by the sponsored Seller to submit to Loan Product Advisor^® (LPA^®).

The income calculator GUI doesn’t require use of a third-party service provider or the ordering of verification reports. It requires manual data entry and is a free tool.

The API may require connecting to a third-party service provider to provide digitized data.

Yes, the income calculator leverages the same capabilities used by AIM and AIM Check API to calculate income.

Note: Calculations may differ from Guide-prescribed methods.

The income calculator may help reduce income calculation errors and potentially reduce defects. The income calculator may also provide eligibility for representation and warranty (R&W) relief for the accuracy of the income calculation, and business review and analysis (for self-employed income).

The API may offer data R&W relief eligibility when using tax transcript data from an approved service provider.

Freddie Mac’s ECO^® business intelligence tool includes income calculator submissions in its Income Performance Dashboard, which provides visibility into income representation and warranty relief eligibility on those submissions. Learn more about ECO.

The API allows for automated submission of paystubs/W-2s, tax return and tax transcript data, either directly from a Seller or via a third-party service provider. The income calculator GUI is manual data entry.

The income calculator API returns R&W relief eligibility on the Freddie Mac Income Calculator Certificate, which AIM Check for Payroll API does not support. Additionally, the income calculator API supports calculations using tax data and paystub/W-2 data, while the AIM Check for Payroll API only supports paystub/W-2. AIM Check for Payroll API will be retired at a future date.

Reach out to your Freddie Mac representative to learn more. For direct integration, resources are available on the Developer Portal. The Freddie Mac Income Calculator webpage will be updated at a future date with integrated third-party service providers.

The income calculator API can calculate income for all the same income types as the income calculator GUI - employed income (base, bonus, overtime, commission) and self-employed income with IRS business structures of Schedule C, 1120S and 1065. In addition, rental income reporting on IRS Form Schedule E and IRS Form 8825 through an 1120S or 1065 can be assessed.

All are available for assessment in a single API submission.

R&W relief eligibility is for:

• The accuracy of the income calculation.
• Business review and analysis (for self-employed income only).

The API may offer data R&W relief eligibility when using tax transcript data from an approved service provider.

The Seller is not relieved of R&Ws when there is fraud.

The LPA feedback certificate will detail the R&W eligibility results:

• When LPA returns loan-level R&W relief eligibility, LPA has assessed sufficient income only from the income calculator data for R&W relief eligibility. Any income not assessed by LPA must be either removed from the LPA submission or must be documented in accordance with the Guide as stated in the feedback certificate messages.
• When LPA returns partial R&W relief eligibility, LPA has assessed sufficient income using income calculator data plus additional income on the loan. Any additional income not assessed by LPA must be documented using requirements of the Guide and stated in the feedback certificate messages.

R&W eligibility is on the employment or business level per borrower. To retain R&W relief, you would need to submit the amount (or less) calculated by the income calculator per employment or business in LPA and maintain the calculator certificate in the mortgage file.

Income R&W relief eligibility on the Freddie Mac Income Calculator Certificate is at the employment,  business level or rental property level. The income calculations may not be sufficient for the loan to receive an Accept risk class in LPA.

Income R&W relief eligibility on the LPA feedback certificate may provide loan-level or partial R&W relief eligibility. When LPA returns loan-level R&W relief, LPA has assessed sufficient income just from income calculator data for R&W relief eligibility. Any submitted income not assessed by LPA must be either removed from the LPA submission as stated in the feedback messages or documented in accordance with the Guide.

When LPA returns partial R&W relief eligibility, LPA has assessed sufficient income using income calculator data plus additional submitted income on the loan. The additional income not assessed by LPA must be documented using requirements of the Guide and stated in the feedback certificate messages.

Only R&W relief eligibility from LPA will flow to other Freddie Mac systems, such as Loan Selling Advisor^® and Loan Coverage Advisor^®.

Income R&W relief eligibility determined by the Freddie Mac Income Calculator and LPA is for:

• The accuracy of the income calculation.
• Business review and analysis (for self-employed income only).

The API may offer data R&W relief eligibility when using tax transcript data from an approved service provider.

The same applies when the calculator identification number is submitted to LPA or the automatic retrieval capability is used, and LPA returns income R&W relief eligibility.

Yes. R&W relief eligibility is only for the seller of the loan to Freddie Mac.

The income calculator certificate can still provide R&W relief eligibility on the employment, business level or rental property level for the accuracy of the income calculation, and business review and analysis (for self-employed income). This applies even when the feedback certificate returns a result of Not Eligible or Unavailable. The income calculator certificate must be retained in the mortgage file.

However, please check the LPA feedback certificate to determine if the loan is eligible for partial relief, as that could be overlooked. When LPA returns partial R&W relief eligibility, LPA has assessed sufficient income using income calculator data plus additional submitted income, when applicable, on the loan. The additional income not assessed by LPA must be documented using requirements of the Guide as  stated in the feedback certificate messages.

For loans where the calculator identification number is submitted in LPA or the automatic retrieval capability is used, submit the amount used to underwrite the loan in LPA; LPA will assess R&W relief eligibility and return results in the LPA feedback certificate.

For loans where the calculator identification number is not submitted in LPA or the automatic retrieval capability isn’t used, you must enter into LPA the amount returned on the calculator certificate or less to maintain the R&W relief eligibility provided on the calculator certificate. If more income is submitted than what is shown on the calculator certificate, you will not be eligible for R&W relief. Single-Family Quality Control will perform their income review with the income documentation in the loan file.

For wage earners, you must submit data from at least one paystub and one income document from a previous year, such as a year-end paystub or a W-2. 

For self-employed borrowers, you must submit data from:

• One year of tax returns or transcripts (Schedule C only) for a business that has been in existence for five or more years.
• Two years of tax returns or transcripts for a business that has been in existence for less than five years. In addition, the tax data must reflect at least two years history of receipt of income and/or losses from the business.

For borrowers with rental income, you must submit tax data from one year of tax returns or tax transcripts.

Only paystubs or W-2s are acceptable documentation for the income calculator. Written verifications of employment (VOE) are not allowed. For verification reports from service providers, you should use AIM instead of the income calculator.

For self-employed borrowers, you must use tax data to use the calculator. If a self-employed borrower has both wage income and self-employed income, the self-employed income can be entered into the calculator, and the wage income must be documented in accordance with the Guide.

Yes. See Guide Section 5102.4 for age of documentation requirements.

The income calculator can assess income even if the borrower has changed employers. Previous employment information should be provided to the calculator, if applicable.

Depending on the scenario, seasonal income can be assessed via the income calculator. The paystub must comply with the age of documentation requirements for the calculation to work. See Guide Section 5102.4 for age of documentation requirements.

Yes, the income calculator assesses fluctuating income for both wage earners and self-employed borrowers. For self-employed income, the calculator will identify whether fluctuating income exists when two years of tax returns are provided. If a calculation is returned, the income is eligible for R&W relief. For income that does not receive R&W relief eligibility in the calculator, you must follow the requirements in the Guide.

Additional enhancements will be made to the income calculator at a later time to address more income scenarios, including more scenarios with fluctuating income.

Yes, but it’s not required. The income calculator GUI allows you to enter multiple businesses and/or rental properties for multiple borrowers in one submission and  multiple employments for multiple borrowers in one submission.

The income calculator API allows for submission of multiple businesses, rental properties and employments for multiple borrowers in one submission associated with one calculator identification number. The response and PDF include income calculations and R&W relief eligibility for all income sources.

When submitting to LPA, you can submit multiple calculator identification numbers. LPA will assess R&W relief eligibility and return message(s) on the feedback certificate.

Note: If you have self-employed borrowers that also report wage income not from their self-employed business, you can only use the income calculator using data from tax documentation.

For paystub/W-2 data, up to five borrowers for each calculator submission.

For tax data, up to two borrowers for each calculator submission.

Each calculator submission has its own calculator identification number. You may use separate calculation submissions for additional borrowers.

Yes. Users have the option to set LPA automatic retrieval to YES when using the calculator. If automatic retrieval is set to YES and certain data is entered when using the calculator, the calculator results can be automatically retrieved when submitting to LPA.

One of the following must be provided for automatic retrieval in LPA:

1. LP Key (if you’ve already submitted to LPA)
2. Seller Number and Seller Loan Number
3. Broker/Correspondent Number and Lender Loan Number

When using paystub and W-2 data to calculate wage income, the Auto-Classify feature can automatically determine the income type, such as base, bonus, commission, overtime or other, based on the earnings description shown on the paystub. While use of this feature is not required, it may help users identify the appropriate income type when a paystub includes unique or unclear earnings descriptions.

The Freddie Mac Income Calculator Certificate will return messages when income cannot be assessed with reasons explaining why the income could not be assessed. There are income types and characteristics that the calculator can’t assess today that may be added at a later date.

For example, self-employed income when one of the businesses is on a fiscal year tax filing schedule or a business which has less than two years of income tax receipt reflected in the tax data; In those instances, the calculator will return a message that states: “The Freddie Mac Income Calculator is unable to assess total self-employed income due to a combination of risk factors.”

The ‘lock calculator submission’ feature can only be initiated by the user from the income calculator’s online interface. Once the calculator submission is locked, no user can edit it. A new calculator entry would need to be created if you wanted to enter different data (e.g., updated paystub, employment detail).

There’s no automatic lock when the loan is assessed by LPA (using either LPA automatic retrieval or by submitting a calculator identification number).

The method to calculate income assessed by the calculator may differ from the income calculated manually using the methods described in the Guide.

If you’re submitting the calculator identification number to LPA or using the LPA automatic retrieval capability, LPA will make the determination if the submitted amount is supported and eligible for income R&W relief eligibility. You must submit the income amount used to underwrite the loan.

If you’re not submitting the calculator identification number to LPA or using the LPA automatic retrieval capability, the income used per employment/business/rental property to underwrite the loan must be the same or less as returned on the calculator certificate to retain R&W relief eligibility.

No. Once you provide your business email address in the calculator, you’ll receive an automatic email with the calculator identification number (Freddie Mac-generated) and loan information (user-provided as inputted into calculator). The calculator identification number allows you to return to the income calculator to view and/or download the calculator entry and associated calculator certificate.

Any user can view past calculations within the income calculator’s interface using the assigned calculator identification number. Use the calculator identification number with the Existing Calculation feature to look up the last calculation for that identification number. You and your team can also track calculator submissions via confirmation email, which include the submission’s calculator identification number and loan information.

The income calculator will keep results for 18 months from the last submission date.

Yes, users can delete prior submissions by clicking the ‘delete calculator submission’ trash icon in the ‘results’ metro stop.

Yes. Users can clone a prior calculator submission. All associated data will be copied and assigned a new calculator identification number. The original submission will remain available for editing.

A business email address must be used. Personal email addresses, including borrower email addresses, should not be submitted.

If you haven’t yet exited the income calculator, email addresses can be added in the final step at the end of the calculation. If you’ve already exited the calculator, then the calculator identification number can’t be searched, and a new calculation must be started. A best practice is to print and save the calculator certificate, which contains the calculator identification number.

No, it’s not a requirement that the calculator identification number be used with an LPA submission or that the automatic retrieval capability be used.

However, the best practice is to allow LPA to assess the calculator entry for the R&W relief eligibility to appear on the LPA Feedback Certificate and to flow to downstream Freddie Mac systems, such as Loan Selling Advisor and Loan Coverage Advisor. This can be accomplished by:

• Including the calculator identification number in the LPA loan submission, or
• Using the LPA automatic retrieval capability from the calculator.

Yes, LPA will always use the latest results associated with the calculator identification number.

Yes. LPA will always use the latest results automatically retrieved from the calculator.

When the calculator identification number is submitted in LPA, LPA uses the latest transaction for each identification number to assess income R&W relief eligibility.

When the Seller chooses to use the LPA automatic retrieval capability in the calculator, the latest transaction for the linked calculator entry will be used to assess R&W relief eligibility.

In addition, LPA uses matching of employment or business name and start date. A best practice is to confirm that the business or employment name and start date in the LPA submission matches the information in the income calculator submission. For rental properties, the property address should be entered as it appears on IRS Form Schedule E.