Home$tart and Home$tart Plus - Income Calculation FAQ
This FAQ addresses a number of questions that Seattle Bank members often ask
regarding the Home$tart and Home$tart Plus income calculation process. While
the FAQ provides additional information regarding this process, it does not address
every possible scenario. For assistance with a specific enrollment, please contact
the Community Investment staff
What is the “Date of Qualification,” and how does it relate
to the income documentation submitted with the enrollment?
The date of qualification is the date that you, as the member, qualify the homebuyer for participation
in Home$tart or Home$tart Plus. This is the date that you would obtain pay stubs from the homebuyer(s)
and calculate the household income in order to determine whether the homebuyer(s) meet the 80 percent
area median income limit (in the county of current residence) needed to qualify for Home$tart or
Home$tart Plus. Therefore, the date of qualification cannot be more than 30 days after the last pay
stub provided and can never fall before the date of the first pay stub provided.
I have Home$tart or Home$tart Plus applicants who have recently started new
jobs or who have just returned from leave without pay. Do I still need to submit
two consecutive pay stubs?
For “Consistent Income – Regular Wages or Salary” and “Inconsistent Income” calculations,
the Seattle Bank can only accept enrollments with two current, consecutive pay stubs
that reflect the homebuyer’s normal work schedule. For example, if a homebuyer
took unpaid leave, he/she must provide two consecutive pay stubs reflecting his/her
regular, full-time schedule before he/she may be qualified for Home$tart or Home$tart Plus.
How do I know if a homebuyer’s income should be calculated
“Inconsistent Income” is generally considered to be
wages from seasonal employment or compensation based on tips or commissions. Any
of the following may indicate inconsistent income:
- If the two consecutive pay stubs provided vary by more than $100 per week (or $200
total in the case of a 24 or 26 pay period schedule), the homebuyer’s income may
be inconsistent. In these cases, please confirm with the employer whether the homebuyer’s
work meets the bank’s definition of seasonal (i.e., having high and low seasons throughout the year,
with work hours and pay that vary based on those seasons; not necessarily periods
of unemployment) or is based on tips/commissions. Calculate the homebuyer's income as inconsistent if
the income falls into either of these categories.
- Note the type of wages listed under the earnings section of the pay stub. If tips or commissions
(or pay codes representing the same) are listed, the income must be
calculated as inconsistent.
- Individuals paid on an on-call basis (i.e., work hours vary dramatically based on employer need)
should be considered as having “Inconsistent
- If a homebuyer’s work meets any of the above definitions and thus requires use of the
inconsistent calculation, but the start date for the position falls within the current year, please
contact Community Investment staff.
What amount(s) from the pay stubs should be included in
the income calculation?
If the homebuyer has not received any bonus or profit sharing income within either
pay period, use the total current gross amount from each pay stub provided (i.e.,
including overtime, shift work, etc.) when calculating homebuyer income. If bonus
or profit sharing income has been received and is included in the total current
gross pay, please subtract these amounts from the gross pay period earnings and
calculate bonus/profit sharing income separately using the Bonus or Profit Sharing Income
calculation on page four of the
Home$tart and Home$tart Plus Annual Income
How should I account for bonuses and/or profit sharing?
Please pay close attention to any bonuses and/or profit sharing indicated on the
pay stub. If bonus/profit sharing appears under the year-to-date earnings, please provide
written documentation from the employer (i.e., a signed Verification of Employment)
which provides the homebuyer’s start date, current year-to-date and prior year bonus/profit
sharing totals. Using the information provided on the most recent pay stub and the
Verification of Employment, determine the projected annual bonus/profit sharing income using the
Bonus or Profit Sharing Income calculation provided on page four of the
Home$tart and Home$tart Plus Annual Income
Calculation Worksheet. Please note: If bonus/profit
sharing was received in the prior year, but has not yet been received in the current year,
the bonus/profit sharing calculation must still be completed.
How do I account for periods of unemployment for seasonal
If a homebuyer’s income is seasonal in nature and he/she received unemployment compensation
during the previous year, include the amount of unemployment compensation received
in the “Prior Year Total Income” field under the “Inconsistent Income” calculation
and provide all required documentation. Please note that a household may not be
enrolled in Home$tart and Home$tart Plus if either the homebuyer or co-buyer is currently
receiving unemployment benefits. Therefore, please enroll homebuyers with periods
of seasonal employment and unemployment throughout the course of the year only during
periods of active employment.
How do I calculate income for homebuyers with pay schedules
representing less than a full year (e.g., salaried teachers receiving pay over nine
months instead of 12)?
Please provide official documentation from the employer with respect to any pay
schedules representing less than one year (e.g., teaching contract, etc.). In
the teaching example cited above, if sufficient documentation is provided, you may
multiply the “Average Pay per Period” by nine months instead of 12 months.
Are students eligible for Home$tart and Home$tart Plus?
The preamble to the regulation which governs Home$tart and Home$tart Plus addressed this issue with the following statement:
"Qualification of students: It is the Finance Board’s expectation that Bank policies
for the homeownership set-aside program will be designed to assist AHP income-eligible
households who, but for receipt of the AHP subsidy, would not be able to afford
to purchase or rehabilitate a home. This would preclude qualification of students
with part-time or no income while in school who ordinarily would have a reasonable
prospect for a substantial increase in income exceeding the AHP income eligibility
limit upon entering the workforce full-time."
What additional documentation may be required for extremely
low income applicants?
Home$tart and Home$tart Plus enrollees must have sufficient
income to qualify for and afford a mortgage at the time of enrollment. In situations
where the household income is calculated to be 30 percent of area median income or less,
Community Investment staff will ask for clarification as to how the homebuyer
will qualify for and maintain a mortgage. In addition, they will need to know the
total monthly PITI (principal, interest, taxes, and insurance) payment for the homebuyer
in order to calculate gross income devoted to housing payments.
Can I enroll a household if either the homebuyer or co-buyer
is currently receiving unemployment benefits?
A household may not be enrolled in Home$tart or Home$tart Plus if the homebuyer or co-buyer
is currently receiving unemployment benefits.
How do I calculate income for and qualify teachers for
Because many teachers are salaried, their incomes may be considered “Consistent
Income–Regular Wages or Salary” and calculated as such. However, some teachers
may additionally work odd jobs during the summer months, which may require that
their incomes be calculated as “Inconsistent Income.” If you have questions, please
contact Community Investment staff
for help in selecting the most accurate calculation method.