The Bigger The Tax Return The Easier It IS to Analyze

Written By: Glenn Michaels, Op-Ed Writer

Underwriters from time to time have difficulty in determining the income to use when they receive a complicated or very involved tax return.

Fannie Mae (FNMA) has made the calculation easier to determine with the use of their form numbered 1084 or formally called “Cash Flow Analysis Form 1084. Numerous loan operating systems have added this form to their operating systems.

The loan operating systems that have added this form make the form very easy to use. If you can point and shoot with your mouse the form becomes interactive. If you move the mouse to a line in the Cash Flow Analysis Form 1084 it indicates where on the borrower’s tax return to find the number that we need if filed. This takes all of the guess work out of the calculation. If there is a number on a tax form, the Cash Flow Analysis Form 1084 explains where to get the number and how to treat it.

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Underwriters can easily determine the IRS form 2106 on the borrower’s Schedule “A”  if the borrower files using a 1040. Underwriters know this number must be taken away from the borrower’s monthly income for all FHA loans. 

The calculation for all kinds of self – employment income can easily be calculated by following the Cash Flow Analysis Worksheet 1084. The revised form dated assists underwriters to determine the income for a borrower from various business entities and the calculation.

The form is broken down by the different tax form and how to determine the income using the required tax form. For example we start with the borrower’s W – 2 income for self – employment and the borrower’s interest and dividend income from self – employment.

If the borrower files a Schedule “C” due to receiving “1099” income or is sole proprietor the Cash Flow Analysis has a section devoted to this calculation.  Fill in lines “A” through “G” for Schedule “C” borrowers and you will come up with the income for a Scwdule “C” borrower.

Borrower’s with recurring Schedule “D” Capital Gain or Capital loss income can be utilize as effective income. Non – recurring Capital Gain income/loss cannot be utilized as effective income.

Borrower’s who file their tax return with a Schedule “E” have rental income/loss, own or are partners in a Sub – Chapter “S” Corporation or in a partnership form “1065”.

The income for Schedule “E”, Sub Chapter “S” and Partnerships “1065 c can be easily calculated with the FNMA Cash Flow Analysis 1084 Worksheet.

Borrower’s that earn income from a “C” corporation can also be easily determined utilizing the FNMA Cash Flow Analysis Form 1084. In addition borrower’s with farming income that file Schedule “F” are also on the form.

Bring them on, the more complicated or the more involved tax return the easier it is to determine the income with the use of the FNMA Cash Flow Analysis Form 1084.

About The Author
Glenn Michaels - As an NAMP® Opinion Editorial Contributor, Glenn Michaels is a mortgage underwriting instructor for CampusUnderwriter ( As a BBA & FHA DE Underwriter, Glenn is a Pace University graduate who also graduated from New York University’s School of Mortgage Finance. Glenn has conducted numerous training classes and has worked in the mortgage banking industry for 38 years. 



Opinion-Editorial (Op-Ed) Disclaimer For NAMP® Library Articles: The views and opinions expressed in the NAMP® Library articles are those of the authors and do not necessarily reflect any official NAMP® policy or position. Examples of analysis performed within this article are only examples. They should not be utilized in real-world application as they are based only on very limited and dated open source information. Assumptions made within the analysis are not reflective of the position of NAMP®. Nothing contained in this article should be considered legal advice.