Fannie Mae recently announced new enhancements to its Income Calculator tool that will help mortgage professionals serve the growing number of mortgage applicants in the U.S. who are self-employed and don’t have traditional sources of income, Fannie Mae said in a press release.

The new web interface provides an additional, free avenue to access Fannie Mae’s existing Income Calculator functionality, which the company introduced in 2023 to help lenders streamline their processes and reduce loan defects. Lenders also still have the option to partner with one of Fannie Mae’s third-party technology service providers to automate the calculation of self-employment income streams during the underwriting process.

With either solution, the lender benefits from an accurate income calculation and the resulting reduced risk of loan repurchase, according to Fannie Mae.

“Whether through our new web-based user interface or through an integrated technology service provider, Fannie Mae’s Income Calculator simplifies the process of underwriting the qualifying income of self-employed borrowers, which traditionally has been a challenging and time-consuming operation for lenders,” Mark Fisher, vice president of Single-Family Credit Risk Solutions, said in the release. “With the launch of our new web interface, originators now can select the solution that best aligns with their processes and meets their needs, while saving time and improving certainty in the quality of the loan.”

Self-employed borrowers represent approximately 10 percent of the U.S. workforce and a growing number of Fannie Mae loan deliveries. Incorrect income calculation and documentation can cause defects, which are identified in Fannie Mae’s post-purchase loan quality reviews. With the Fannie Mae Income Calculator, lenders receive an accurate, validated income amount for use in the underwriting process.

Fannie Mae remains committed to expanding opportunities for those who are ready to purchase a home and maintain a mortgage. Recent innovations include:

• New capabilities in the DU validation service that enable lenders to automatically validate borrower assets, income, and employment using a single asset report, improving the mortgage origination process for lenders and homebuyers.
• An improved pre-qualification experience through the DU early assessment enhancement to help lenders determine homebuyer preparedness and mortgage options earlier without the impact of a hard credit check on the consumer.
• A new $2,500 credit available to qualified, creditworthy very low-income borrowers through the HomeReady product to help overcome two of the greatest barriers to homeownership – down payment and closing costs.