Conventional projected income is an option that allows certain borrowers to qualify for a mortgage using income from a new job or a future salary increase. This guideline can be especially helpful for recent graduates, professionals starting a new role, or anyone who has accepted an offer but has not yet received their first paycheck. Understanding how conventional projected income works under Fannie Mae (FNMA) and Freddie Mac (FHLMC) guidelines is critical for ensuring a smooth loan approval process.

Eligibility for Conventional Projected Income

Not every borrower or situation qualifies for conventional projected income. To be eligible:

  • The income must be from new primary employment or a future salary increase with the current employer.
  • Income must be salaried and non-fluctuating (hourly pay is generally not permitted).
  • The borrower’s employer cannot be a family member or an interested party in the real estate transaction.
  • Projected income is not allowed in Miami-Dade County or Broward County, Florida, under any circumstances.

Timing and Start Date Requirements

Lenders must carefully evaluate when the new employment or salary increase begins:

  • The employment start date must occur no later than 90 days after the Note Date.
  • If income begins more than 30 days after the Note Date, additional underwriting and reserves may be required.
  • Verification of employment (VVOE or PCV) must confirm that the job offer remains valid prior to closing.

Documentation Needed for Projected Income

Borrowers using conventional projected income must provide specific documentation to support their qualification:

  • A fully executed employment offer letter or contract signed by both the employer and borrower.
  • The document must include the start date, position, type and rate of pay, and confirmation that the offer is non-contingent.
  • If using a future salary increase, proof must show the increase is fully approved by the current employer.
  • A paystub, VOE, or third-party verification will be required once income begins.

Loan Purposes and Eligible Properties

Under conventional projected income guidelines, eligible loan types typically include:

  • Purchase transactions
  • Rate/term refinances
  • Cash-out refinances (depending on Fannie Mae or Freddie Mac requirements)

Property eligibility may include primary residences, second homes, and some investment properties, though restrictions vary depending on the investor.

Key Takeaways for Borrowers

Conventional projected income can provide flexibility for homebuyers who have accepted a new job or are about to receive a pay increase. However, the rules are strict, and documentation must be clear and complete. Working with an experienced mortgage professional ensures these requirements are met, helping you avoid delays or denials at closing.

At North Star Mortgage Network, we guide clients through every step of the process, making sure your mortgage approval is based on the strongest qualifying factors available.

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