Fannie Mae Cash Flow Analysis- The 1084 form. 
  • The form breaks down the analysis of the borrowers tax returns by examining cash flow from the appropriate schedules and form.
  • Very few borrowers will have all entries on all the lines on the 1084.
  • Many line items have both a + and -. This allows for addition of allowable income and expenses and subtraction of non recurring income and expenses.

As you reveiw the tax returns its important to remember that the prperation of tax returns is the governments way o determining what income taxes are bases on. The government allows certain reduction to income so that the borrowers tax burden can be reduced. WHen peopel are completing their tax forms, they are motivated to reduce their income thereby reducing their taxes. The borowers goal is to document the least amount of income as possible. 

The mortgage industry depends on these returns to determine the borrowers capacity. So our objective in analyzing the tax returns is to detmine the most income available, and that is accomplished though underwriing guidlines and use of the 1084 form.

Both fannie Mae and Freddie Mac accept the income derrived by using the 1084 worksheet. The form explains that it should be used for individuals who derive their income from the following.

  1. Borrowers who have 25% or greater interest in a business.
  2. Borrowers who are eployed by family members.
  3. BOrrowers who are paid commissions.
  4. Borrowers who own rental property.
  5. Any borrower who receives variable income, has earning reported on the IRS form 1099, or receives income that cannot otherwise be verifed by an independed and knowable source.


The 1084 is orgainized to follow the schedules and forms of personal and business tax returns. The 1084 analyzez specific income and deductions looking for income that is regular and recurring. The form requests specific information and then ask the askes the underwriter to ADD or SUBTRACT the income or loss.

At the bottom of the worksheet is the analysis of the K-1’s for both the partnership and S-Corporation.

Page 2 of the 1084 form analyzez the Partnership, S Corporation and Corporation. The calculations are totaled and the form concludes with an analysis of the year-to-date profit and loss statement.

This mannual is structured to follow the 1084 when reviewing the various tax returns and their schedules and forms.Many of the instructions that follow have been taken from the Fannie Mae’s instructions located at www.Fanniemae.com.



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