Use ChatGPT to Speed Up Complex Income Analysis

Before diving into a complex income type, confirm your methodology with ChatGPT:

1. Open {{tool:ChatGPT.url}} and start a new conversation
2. Ask your methodology question:

I'm underwriting a conventional loan for a borrower who is a 40% owner of an S-corp. They receive both W-2 wages from the business and show K-1 income. What is the Fannie Mae method for calculating qualifying income? Which forms do I need, what add-backs are allowed, and how do I handle income that's declining year-over-year?

1. Read the methodology explanation before starting your analysis
2. Ask follow-up questions: "What if the S-corp has a loss in Year 2 but income in Year 1?"

What you get: A clear walkthrough of the methodology before you start — so you calculate correctly the first time, rather than discovering an error after 2 hours of work.

For complex income types, ask ChatGPT to help you structure the calculation in a logical sequence:

Walk me through the step-by-step calculation sequence for Schedule C self-employed income using the FNMA method. I'll collect the numbers from the tax returns — just give me the structure in order.

What you get: A numbered calculation sequence:

1. Start with Net Profit from Schedule C Line 31
2. Add back Depreciation from Form 4562
3. Add back Depletion (if applicable)
4. Add back Business Use of Home (Schedule C Line 30)
5. Subtract non-recurring income
6. Sum for each year → average over 24 months → divide by 24 for monthly qualifying income

Use this structure as your worksheet skeleton.

After you've done the calculations yourself (using your spreadsheet), use ChatGPT to generate the file documentation:

1. Enter your completed numbers (no borrower name or SSN — just the figures and employment type):

Write an income analysis summary for a file note. Employment type: self-employed sole proprietor, Schedule C. Year 1 net profit: $68,400. Add-backs: depreciation $4,200, business mileage $1,800. Adjusted Year 1: $74,400. Year 2 net profit: $72,600. Add-backs: depreciation $3,900. Adjusted Year 2: $76,500. Two-year average: $75,450. Monthly qualifying income: $6,288. Income is stable/increasing. Per FNMA B3-3.4.

1. Use the output as your Encompass file note or income calculation summary

When your income calculation produces a number different from what the LO expected:

Write a plain-English explanation for a loan officer explaining why a borrower's qualifying income is $6,288/month despite having gross Schedule C receipts that appear higher. Explain: depreciation add-back increases qualifying income vs. what the Schedule C net shows, but overall qualifying is lower than gross receipts because we use net income methodology. No jargon. Keep it under 150 words.