Program Family Matrix + VA Module + DSCR Module Gap Closure Supplement v1.0 • Precision Engineering Addendum BIX Technology Corp | Purlend / PreFi, Inc. | CONFIDENTIAL | Addendum to Architecture v1.0 + Data Dictionary v1.0
This addendum closes eight precision gaps identified in the Architecture v1.0 and Data Dictionary v1.0 review. It defines: (1) the full Program Family Layer with ten discrete families, (2) the complete VA underwriting module with residual income, funding fee, and refinance paths, (3) the DSCR program module with property-income qualification and entity vesting, (4) the formal cash-to-close stack, (5) the loan purpose engine, (6) the income module split, and (7) the guideline source-of-truth map. This document is a required companion to the existing BIX package.
The prior specification is strong directionally but is not yet implementation-safe for a team with no mortgage background. The gaps in this document are not stylistic — they are correctness gaps. Missing DSCR as a separate branch, conflating VA with generic government logic, and treating qualifying income as a single bucket will produce a system that gets the math wrong under edge cases that appear regularly in real borrower files. This addendum must be incorporated into the Data Dictionary before BIX begins building the income, program, or scenario modules.
The following eight gaps were identified through review of the existing specification against the Fannie Mae Single Family Selling Guide (March 4, 2026), the VA Lenders Handbook (Pamphlet 26-7), and Deephaven Mortgage DSCR program documentation.
# Gap Why It Matters Addressed In G1 Program Family Layer not explicit Engineers will mix incompatible eligibility logic across agency, government, non-QM, and DSCR if all programs share one rules tree Section 2: Program Family Matrix G2 DSCR not included as distinct family DSCR qualifies on property income, not borrower income or employment. Requires its own data model, math, and entity vesting rules Section 3: DSCR Module G3 VA treated as generic government loan VA has unique residual income, funding fee, IRRRL, and COE logic that cannot share a branch with FHA or USDA without producing wrong results Section 4: VA Module G4 Qualifying income not split by type Fannie Mae March 2026 guide has separate sections for base, bonus/commission/OT, RSUs, boarder income, employment-related assets, self-employment, and rental income. One bucket loses accuracy Section 5: Income Module Split G5 Cash-to-close stack not sequenced Fannie separately addresses gifts, grants, employer assistance, IPCs, Community Seconds, and borrowed funds. Stack order matters for program compliance Section 6: Cash-to-Close Stack G6 Loan purpose not formally branched Purchase, limited cash-out refi, cash-out refi, IRRRL, and DSCR cash-out cannot share the same logic tree Section 7: Loan Purpose Engine G7 No guideline source-of-truth map Without citation to authoritative source per rule, engineers create ‘mortgage fan fiction’ — rules that sound right but aren’t guideline-supported Section 8: Rule Citation Matrix G8 No non-goals section MVP must not pretend to replace AUS or final underwriter judgment. Boundaries protect product, team, and borrowers Section 9: Non-Goals Spec
The Clarity Engine must not treat all loans as one decisioning universe. Each program family has a distinct qualifier (what makes a borrower eligible), a distinct authoritative source, and programs that cannot be combined with other families.
Program families are not interchangeable. Each family has its own income treatment, DTI logic, asset rules, property standards, and compliance obligations. An engineer who applies FHA income treatment to a DSCR loan, or VA residual income to a Conventional loan, will produce incorrect qualification results. The engine must route each borrower to the correct family FIRST, then apply that family’s rules. Never apply cross-family rules.
QUALIFIER: Borrower income, credit, and assets qualify. DU/LP automated underwriting. AUTHORITATIVE SOURCE: Fannie Mae Single Family Selling Guide (March 4, 2026) + Freddie Mac Single-Family Seller/Servicer Guide PROGRAMS: 30yr/20yr/15yr/10yr Fixed, 5/1, 7/1, 10/1 ARM, HomeReady, Home Possible, 97% LTV programs INCOMPATIBLE WITH: Cannot use DSCR income logic. Cannot use VA residual income. Cannot use FHA MIP structure.
QUALIFIER: Borrower income + subordinate financing from government/nonprofit sources. Income limits apply. AUTHORITATIVE SOURCE: Fannie Mae Selling Guide: Community Seconds, HomeReady, shared equity, DPA overlay sections PROGRAMS: HomeReady (3% down, AMI income limit), Community Seconds (up to 5% subordinate), shared equity structures INCOMPATIBLE WITH: Cannot use DSCR or investment-property logic. Primary residence only.
FHA QUALIFIER: Borrower income and credit. Government-insured. UFMIP + annual MIP required. AUTHORITATIVE SOURCE: FHA Single Family Housing Policy Handbook 4000.1 (current edition) PROGRAMS: FHA 30yr/15yr Fixed, 203(k) renovation, FHA streamline refinance, FHA cash-out INCOMPATIBLE WITH: Cannot use VA funding fee logic. Cannot use DSCR. UFMIP always required (1.75% of base loan).
VA QUALIFIER: Veteran/service member eligibility (COE), occupancy, VA credit standards, residual income test. AUTHORITATIVE SOURCE: VA Lenders Handbook / VA Pamphlet 26-7 (authoritative). Ginnie Mae MBS Guide (pooling/securitization only). PROGRAMS: VA Purchase, VA IRRRL (streamline refi), VA Cash-Out Refinance (Type I and Type II) INCOMPATIBLE WITH: Cannot use FHA MIP. Cannot ignore residual income test. Cannot use conventional DTI as sole qualifier.
QUALIFIER: Borrower income (income limits apply), rural property location, occupancy. AUTHORITATIVE SOURCE: USDA Single Family Housing Guaranteed Loan Program Technical Handbook PROGRAMS: USDA Guaranteed 30yr Fixed (Section 502), streamline assist refi INCOMPATIBLE WITH: Rural property requirement is absolute. Income limits are hard caps by household size and county.
QUALIFIER: Alternative income documentation. Does not follow agency income rules. AUTHORITATIVE SOURCE: Lender-specific guidelines. Angel Oak, Deephaven, A&D Mortgage, NewRez non-QM overlays. PROGRAMS: Bank Statement (12mo/24mo), 1099-only, Asset Depletion/Utilization, P&L-only, Foreign National INCOMPATIBLE WITH: Cannot use agency income treatment. No AUS (DU/LP). Manual underwrite only.
QUALIFIER: Property income covers debt service. Borrower income and employment NOT required. AUTHORITATIVE SOURCE: Lender-specific DSCR guidelines (Deephaven DSCR, Lima One, CIVIC, Kiavi, etc.) PROGRAMS: DSCR SFR, DSCR 2-4 Unit, DSCR 5-9 Unit, DSCR Second, DSCR Cash-Out INCOMPATIBLE WITH: Cannot use borrower income in qualification. Cannot use primary residence occupancy. Entity vesting rules apply.
QUALIFIER: Lender-specific rules. CRA geographic incentives. May expand DTI or LTV beyond agency. AUTHORITATIVE SOURCE: Individual bank CRA program guides. FFIEC CRA regulations. PROGRAMS: CRA First-Time Buyer, Community Development, LMI borrower programs, bank portfolio products INCOMPATIBLE WITH: Rules vary by lender. Must document lender-specific overlay separately from agency logic.
QUALIFIER: Borrower equity, combined LTV, and first-lien program compatibility. AUTHORITATIVE SOURCE: Lender-specific HELOC and closed-end second guidelines. TRID applies. PROGRAMS: HELOC (variable line), Closed-End Second (fixed), Home Equity Loan INCOMPATIBLE WITH: Cannot be primary qualification path. Cannot be used to bypass first-lien down payment. CLTV governs, not LTV.
QUALIFIER: Subject-to-renovation appraised value. Borrower income qualifies. Draw schedule controls. AUTHORITATIVE SOURCE: FHA 203(k) handbook. Fannie Mae HomeStyle Renovation. VA Renovation guidelines. PROGRAMS: FHA 203(k) Standard and Limited, Fannie HomeStyle, Freddie CHOICERenovation INCOMPATIBLE WITH: Cannot use as-is value for LTV. Draw schedule must be in scenario. Contractor vetting required.
Program Family Routing Logic
Route to the correct program family BEFORE applying any eligibility rules. Family determines which math functions, income treatments, and DTI thresholds apply. Primary routing signal: deal_type + occupancy_type + veteran_flag + investor_flag + borrower_income_available_flag. IF investor_flag = true AND borrower_income_available_flag = false → route to DSCR (F7). IF veteran_flag = true → route to VA (F4) as primary and run VA vs. Conventional comparison. IF first_time_buyer_flag = true AND income ≤ AMI limit → also route to Affordable (F2) branch. NEVER apply agency income rules to DSCR. NEVER apply DSCR property-income logic to agency programs.
DSCR (Debt Service Coverage Ratio) is a non-QM investor loan program where the borrower qualifies based on the subject property’s rental income, not the borrower’s personal income or employment. Deephaven Mortgage’s current wholesale product lineup includes DSCR, DSCR Second, and DSCR 5-9 Unit as distinct programs.
The property must pay for itself. DSCR Ratio = Gross Monthly Rent ÷ Monthly PITIA (Principal + Interest + Taxes + Insurance + HOA) DSCR ≥ 1.00: Property income covers debt service. Minimum threshold for most programs. DSCR ≥ 1.20 or 1.25: Required for better pricing or higher LTV in many lender programs. DSCR < 1.00: Property does not fully cover debt. Some lenders allow DSCR down to 0.75 with compensating factors (larger down payment, higher reserves, strong credit). DSCR is NOT a Fannie Mae program. Do not route DSCR loans to agency eligibility logic.
Field Name Type Req Example Notes / Rules dscr_investor_flag boolean yes true Must be true for DSCR routing. Cannot be primary residence. entity_vesting_flag boolean yes true LLC, LP, corporation. Triggers entity documentation requirements. entity_name string no Oak Street LLC Required if entity_vesting_flag = true. entity_type enum no LLC Values: llc, lp, s_corp, c_corp, trust, individual borrower_income_used_flag boolean yes false FALSE for DSCR. Income and employment are not verified or required. gross_monthly_rent decimal yes 4800.00 Market rent from appraisal rent schedule OR existing lease (lower of). Source: appraisal Form 1007 or current lease. rent_source_type enum yes
Values: executed_lease, appraisal_market_rent, short_term_rental_history. Priority: lease > appraisal. existing_lease_monthly decimal no 4800.00 Current executed lease amount. Use when rent_source_type = LEASE. appraised_market_rent decimal no 5000.00 From appraisal Form 1007. Use when no current lease. short_term_rental_history_monthly decimal no 5200.00 12-month average from AirDNA or similar. Some lenders accept for STR properties. dscr_ratio decimal yes 1.18 DERIVED: gross_monthly_rent ÷ monthly_pitia. Must be ≥ 1.00 for most programs. dscr_min_ratio_required decimal yes 1.00 Lender-specific minimum. Range: 0.75 (no-ratio products) to 1.25. property_seasoning_months integer no 0 Months owned before refinance. Cash-out typically requires 6-12 months seasoning. max_ltv_dscr_purchase decimal yes 0.80 Typical: 80% LTV for 1-unit DSCR purchase. Lower for 2-4 unit or lower DSCR ratio. max_ltv_dscr_cashout decimal yes 0.75 Cash-out typically capped at 75% LTV for DSCR. min_credit_score_dscr integer yes 680 Most DSCR programs: 680 minimum. Some go to 640 with higher reserves or lower LTV. reserve_requirement_months integer yes 6 Post-close reserves: typically 6-12 months PITIA. Verify per lender program. max_loan_amount decimal no 3000000.00 DSCR often allows jumbo loan amounts. Deephaven: up to $2.5M for single DSCR. property_type_dscr enum yes
Values: sfr_1_unit, sfr_2_4_unit, sfr_5_9_unit, condo, townhome. Some lenders restrict condos.
// DSCR Ratio
DSCR_RATIO = gross_monthly_rent / monthly_pitia
// monthly_pitia for DSCR (note: no MI for most DSCR programs)
monthly_pitia = PMT(rate, term_months, loan_amount)
+ monthly_tax + monthly_insurance + hoa_monthly
// Rent Source Hierarchy (use in this priority order):
// 1. executed_lease_monthly (current signed lease)
// 2. appraised_market_rent (Form 1007 from appraisal)
// 3. short_term_rental_history_monthly (12-mo avg, lender-specific)
// DSCR LTV Tiering (typical - verify per lender program):
// DSCR >= 1.25: Max LTV 80% purchase, 75% cash-out
// DSCR >= 1.00: Max LTV 75% purchase, 70% cash-out
// DSCR >= 0.75: Max LTV 70% purchase (no-ratio product, lender-specific)
// DSCR < 0.75: Typically ineligible. Check lender overlay.
// Reserve Requirement
required_reserves = monthly_pitia * reserve_requirement_months
// Must be verified in eligible asset accounts post-closing
3.4 DSCR Eligibility Rules
Rule ID
Rule Name
Logic
DSCR Note
DSCR_001
Investor occupancy required
occupancy_type must be INVESTMENT
No primary, second home, or mixed-use with owner-occupancy.
DSCR_002
Borrower income not used
borrower_income_used_flag must be FALSE
If borrower insists on income being considered, route to Non-QM full-doc instead.
DSCR_003
DSCR ratio minimum
dscr_ratio ≥ dscr_min_ratio_required
Lender-specific. 1.00 is floor for most. Some offer 0.75-0.99 with compensating factors.
DSCR_004
Rent source documentation
rent_source_type must be set; source docs required
Lease: 1-2 page executed lease. Appraisal: Form 1007. STR: 12-month verified history.
DSCR_005
Credit score minimum
credit_score ≥ min_credit_score_dscr
680 for most programs. Some allow 640 at lower LTV / higher reserves.
DSCR_006
LTV per DSCR tier
ltv ≤ max_ltv for that DSCR tier
Tiered table: DSCR ≥ 1.25 / 1.00 / 0.75 each has different max LTV.
DSCR_007
Reserve requirement
liquid reserves ≥ required_reserves
Post-close. 6 months minimum for most programs. 12 months for 5-9 unit.
DSCR_008
Entity vesting documentation
If entity_vesting_flag: provide operating agreement, EIN, cert of good standing
LLC/entity vesting is a DSCR-specific feature not available in agency loans.
DSCR_009
No owner-occupant income
employment, W-2, 1040 not collected or used
Processing income data for a DSCR file is a compliance risk, not a feature.
DSCR_010
Seasoning for cash-out
property_seasoning_months ≥ 6 for cash-out
Most DSCR lenders require 6-12 months ownership before cash-out.VA is not ‘FHA with different fees.’ VA has a distinct underwriting system with its own borrower eligibility chain, an affordability methodology based on residual income (not just DTI), three distinct refinance paths with different rules, a fee model tied to service category and usage count, and property standards enforced through VA-specific appraisal requirements.
Tier 1 (Underwriting): VA Lenders Handbook / VA Pamphlet 26-7 — authoritative for all borrower eligibility, income, residual income, DTI, funding fee, property, and refinance rules. Tier 2 (Securitization): Ginnie Mae MBS Guide — authoritative for pooling, MBS execution, and issuer requirements. NOT for borrower underwriting. Tier 3 (Pricing/Product): Lender overlays — may impose stricter credit score, LTV, or DTI than VA base guidelines. Must be modeled as a separate overlay layer. NEVER use Ginnie Mae as the source for underwriting rules. NEVER use Fannie Mae DTI or PMI logic for VA loans.
Field Name Type Req Example Notes / Rules veteran_flag boolean yes true Must be true to route to VA program family. coe_status enum yes
Values: obtained, pending, not_applied. COE must be present before closing. coe_entitlement_amount decimal no 36060.00 Basic entitlement amount from COE. May affect loan limit if partial entitlement. entitlement_type enum no
Values: full, partial, restored. Partial entitlement affects max loan with no down payment. prior_va_loan_outstanding boolean no false If true, remaining entitlement must be calculated. service_category enum yes
Values: active_duty, national_guard_reserves_activated, national_guard_reserves_not_activated, surviving_spouse, discharged_veteran discharge_type enum no
Values: honorable, general, other. Only honorable and general qualify for most purposes. disability_rating_flag boolean no false VA disability rating ≥ 10% → funding fee waiver. Surviving spouses of service-connected deaths: also exempt. eligible_survivor_flag boolean no false Unremarried surviving spouse of a veteran who died in service or from service-connected disability. va_loan_purpose enum yes
Values: purchase, irrrl, cash_out_type1, cash_out_type2. Each has distinct eligibility rules. prior_va_loan_refinanced boolean no false IRRRL: must be refinancing an existing VA loan. family_size integer yes 3 Required for residual income table lookup. Includes all dependents. geographic_region enum yes
Values: northeast, midwest, south, west. Drives residual income table minimum.
Residual income is the amount remaining after subtracting all monthly debts, the proposed housing payment, and a maintenance/utility factor from the borrower’s net income. The VA Handbook’s Chapter 4 provides required residual income tables by family size, region, and loan size. This is not optional — it is required for every VA loan.
Residual Income Calculation
// VA Residual Income Calculation (VA Handbook Chapter 4)
// Step 1: Calculate gross monthly income (same as agency GMI)
gross_monthly_income = SUM(all qualifying income sources)
// Step 2: Calculate net income (after federal + state taxes)
// Use VA's tax withholding tables or actual withholding from paystub
net_monthly_income = gross_monthly_income - estimated_taxes_and_deductions
// Step 3: Calculate monthly shelter expense
shelter_expense = proposed_pitia // Principal + Interest + Taxes + Insurance + HOA
// Step 4: Calculate monthly debt obligations (same as agency DTI debts)
total_monthly_debts = SUM(Liability.monthly_payment WHERE include_in_dti = true)
// Step 5: Calculate maintenance and utilities estimate
// VA standard: $0.14 per square foot of living area
maintenance_utilities = property_sqft * 0.14
// Step 6: Calculate residual income
residual_income = net_monthly_income
- shelter_expense
- total_monthly_debts
- maintenance_utilities
// Step 7: Compare to VA residual income table minimum
residual_income_required = lookup(family_size, geographic_region, loan_amount)
residual_income_pass = (residual_income >= residual_income_required)
VA Residual Income Table (Loan Amounts ≥ $80,000)
Source: VA Handbook Chapter 4. Values are monthly residual income required in USD.
Family Size
Northeast
Midwest
South
West
1 person
$450
$441
$441
$491
2 persons
$755
$738
$738
$823
3 persons
$909
$889
$889
$990
4 persons
$1,025
$1,003
$1,003
$1,117
5 persons
$1,062
$1,039
$1,039
$1,158
Over 5: add per additional
$80
$80
$80
$80
Note: For loan amounts < $80,000, VA uses a separate lower table. If the veteran has no dependents but contributes substantially to a dependent’s support, include that person in family size. These values are from VA Handbook Chapter 4 and must be verified against the current published VA handbook before building the lookup function.
4.4 VA Funding Fee
The funding fee is a VA-specific charge that replaces private mortgage insurance. It is calculated as a percentage of the loan amount and varies by: (1) loan purpose, (2) service category, (3) down payment percentage, and (4) whether the borrower has used VA financing before.
Funding Fee Table — Purchase Loans (2023 rates, verify current VA published rates)
Service Category
<5% Down (1st use)
<5% Down (2nd+ use)
5-9.99% Down
10%+ Down
Active duty / veteran (regular military)
2.15%
3.30%
1.50%
1.25%
National Guard / Reserves (1st use)
2.40%
3.30%
1.75%
1.50%
FUNDING FEE EXEMPTIONS + ENGINEERING RULES
EXEMPT: Veterans with service-connected disability rating ≥ 10%. disability_rating_flag = true → funding_fee = $0.
EXEMPT: Surviving spouses receiving DIC (Dependency and Indemnity Compensation). eligible_survivor_flag = true → funding_fee = $0.
IRRRL funding fee: 0.50% flat. NOT a purchase-rate table.
Cash-out funding fee: 2.15% (1st use) / 3.30% (subsequent) for all service categories.
The funding fee can be financed into the loan. If financed: add to loan_amount before calculating LTV and payment.
Engine rule: ALWAYS check disability_rating_flag BEFORE calculating funding fee. Never charge an exempt borrower.
4.5 VA Refinance Paths
Refinance Type
Key Requirements
Net Tangible Benefit Test
Funding Fee
VA Purchase
COE present. Occupancy: primary. No minimum seasoning. Residual income required.
N/A
2.15% / 3.30% (by usage)
IRRRL (Streamline)
Must refinance existing VA loan. Must lower rate (or ARM-to-fixed). No appraisal required in most cases. No income/credit verification required.
Rate must decrease OR moving from ARM to fixed rate
0.50% flat
Cash-Out Type I
Existing VA loan. Loan ≤ payoff balance (no net cash). New appraisal required. Full underwriting required.
Must provide lower rate or term benefit
2.15% / 3.30%
Cash-Out Type II
Any loan type (refinancing non-VA into VA). Cash may be taken above payoff. Full underwriting. Appraisal required.
Full qualification. Residual income test required.
2.15% / 3.30%
4.6 VA Eligibility Rules
Rule ID
Rule Name
Logic
VA Handbook Reference
VA_001
COE required
coe_status must be OBTAINED before commitment
Chapter 1: Entitlement
VA_002
Occupancy: purchase
Primary residence intended. Veteran or eligible family member must occupy within reasonable time
Chapter 3: Borrower Eligibility
VA_003
Residual income minimum
residual_income ≥ residual_income_required for family_size + region + loan_amount
Chapter 4: Credit Underwriting
VA_004
DTI guidance
DTI ≥ 41%: triggers additional scrutiny. NOT a hard cap. Residual income can compensate. DTI is a factor, not the sole qualifier.
Chapter 4: Credit Underwriting
VA_005
Funding fee calculation
Calculate per service_category, down_payment_pct, and prior_va_usage. Set to $0 if disability_rating_flag = true
Chapter 8: Borrower Fees
VA_006
IRRRL must be VA-to-VA
va_loan_purpose = IRRRL requires prior_va_loan_refinanced = true
Chapter 6: Refinance
VA_007
IRRRL net tangible benefit
New rate must be lower OR product must change ARM-to-fixed. Net benefit statement required.
Chapter 6: Refinance
VA_008
Cash-out: appraisal required
Both Type I and Type II cash-out require new VA appraisal. No appraisal waiver.
Chapter 6: Refinance
VA_009
Entitlement check
If prior_va_loan_outstanding: calculate remaining entitlement. Partial entitlement may require down payment to reach no-down-payment threshold.
Chapter 1: Entitlement
VA_010
No PMI / MIP
VA loans have no monthly mortgage insurance. Funding fee replaces MI. MI fields must be $0.
Chapter 7: Escrow, Taxes, AssessmentsThe Fannie Mae March 4, 2026 Selling Guide has separate dedicated sections for each income type. A single ‘income bucket’ will produce incorrect qualifying amounts for variable, self-employed, or asset-based borrowers. Each income type must be its own rules module.
Income Type Fannie Source Qualifying Treatment Engine Module Base Salary / Hourly Fannie B3-3.1-01 Current salary or hourly rate × hours. Use most recent paystub. W-2 for history. base_income_module Bonus / Commission / Overtime Fannie B3-3.1-03 2-year history required. Use 24-month average. If declining YoY: use lower year. variable_income_module RSU / Restricted Stock Fannie B3-3.1-09 3-year receipt history + 3-year continuance likely. Use 24-month average. rsu_income_module Boarder Income Fannie B3-3.1-09 12-month documented history. Up to 30% of qualifying income. Primary residence only. boarder_income_module Self-Employment Fannie B3-3.4 Schedule C/S-Corp/K-1 analysis. Add-backs: depreciation, depletion, business use of home, non-recurring losses. 24-month average. self_employment_module Rental Income Fannie B3-3.1-08 75% of gross rent from Schedule E or executed lease. Subject property rental offset rules vary. rental_income_module Social Security / Disability Fannie B3-3.1-09 Net + 25% gross-up for non-taxable income. Verify continuance. ss_disability_module Employment-Related Assets Fannie B3-3.1-09 Eligible assets ÷ remaining term (if age 70+ or retiring). Fannie: eligible assets ÷ 240 months. asset_as_income_module Pension / Retirement Fannie B3-3.1-09 Award letter or 1099R. Must verify continuance. Gross-up if non-taxable. pension_module
Self-Employment Add-Back Algorithm
// Self-Employment Qualifying Income (Fannie B3-3.4)
// Inputs: Schedule C, S-Corp K-1, or Partnership K-1 for 2 tax years
// Year N net income = net profit per Schedule C line 31
year_n_net = schedule_c_net_profit_yr_n
year_n1_net = schedule_c_net_profit_yr_n1
// Add-backs (non-cash charges that reduce taxable income but not cash flow):
add_back_depreciation = schedule_c_line_13_or_form_4562
add_back_depletion = schedule_c_line_12 (if applicable)
add_back_home_office = schedule_c_line_30 (home office deduction)
add_back_non_recurring_loss= one-time documented losses (e.g., casualty loss)
// Deductions (items that inflate income but are not available cash):
deduct_business_use_vehicle = schedule_c_line_9 or 9a (verify vs mileage method)
deduct_meals_entertainment = schedule_c_line_24a + 24b (50% typically non-deductible)
// Adjusted qualifying income per year
adj_income_yr_n = year_n_net + add_backs_yr_n - deductions_yr_n
adj_income_yr_n1 = year_n1_net + add_backs_yr_n1 - deductions_yr_n1
// 24-month average (unless declining year rule applies)
IF adj_income_yr_n > adj_income_yr_n1:
se_qualifying_income = (adj_income_yr_n + adj_income_yr_n1) / 24
ELSE IF adj_income_yr_n1 - adj_income_yr_n > (adj_income_yr_n1 * 0.10):
// Declining income > 10% triggers use-lower-year rule
se_qualifying_income = adj_income_yr_n / 12 // Use only current year
flag_declining_income = trueFannie Mae’s Selling Guide addresses gifts, grants, employer assistance, interested party contributions, Community Seconds, and borrowed funds in separate sections. The cash-to-close calculation must follow this sequenced stack — the order determines which funds satisfy which program requirements.
Stack Sequence (Process in This Order) # Source Fannie Reference Program Constraints Engine Field 1 Borrower own funds (liquid assets) B3-4.2: Assets No restrictions. Primary source. borrower_liquid_assets 2 Gifts from family members B3-4.3-04: Gifts Conventional: 20%+ down = no restriction. <20% down: gift must be for down payment only. gift_amount_verified 3 Grants (government / nonprofit) B3-4.3-06: Grants Non-repayable. Borrower does not need to repay. May combine with Community Seconds. grant_amount 4 Employer assistance B3-4.3-07: Employer Assistance May not exceed 2% of purchase price on standard programs. HomeReady: different rules. employer_assistance_amount 5 Lender credits B3-4.1: Lender Credits Applied to closing costs only, not down payment. Cannot bring down payment below program minimum. lender_credit_amount 6 Seller concessions / IPCs B3-4.1: Interested Party Contributions IPC limit: 3% (LTV 90%+), 6% (LTV 75-89.99%), 9% (LTV <75%). Excess must reduce price. seller_concession_amount 7 Community Seconds / subordinate financing B5-5.1: Community Seconds Must be from government or nonprofit. First lien lender must approve. Not for investment property. community_seconds_amount 8 Borrowed funds secured by asset B3-4.3: Borrowed Funds Asset must be separately owned property or retirement account. Monthly debt obligation counted in DTI. borrowed_funds_secured 9 Reserves after close B3-4.1: Reserves This is a check, not a source. After all sources applied, verify qualifying reserves remain. reserves_post_close
// Cash-to-Close Calculation (process in stack order)
required_cash = purchase_price * (1 - base_ltv)
+ estimated_closing_costs
+ prepaid_items_estimate
- seller_concession (capped at IPC limit)
- grant_amount
- lender_credit_amount
- community_seconds_amount
- employer_assistance_amount
net_cash_from_borrower = required_cash - gift_amount_verified
// Validation checks:
// 1. net_cash_from_borrower <= funds_available_for_closing
// 2. reserves_post_close >= reserve_requirement_months * monthly_pitia
// 3. gift_amount does not exceed down_payment if LTV > 80% (conventional)
// 4. IPC amount does not exceed program limit for this LTV tierFannie Mae explicitly distinguishes purchase, limited cash-out refinance, and cash-out refinance as separate transaction types with different LTV limits, seasoning requirements, and eligibility rules. The Clarity Engine must route each deal to the correct purpose branch before applying any other logic.
Loan Purpose Agency Reference Key LTV Limit Seasoning Requirement Distinguishing Rule Purchase Fannie B2-1.2-01 Up to 97% (HomeReady); 95% standard Conv None LTV based on lower of purchase price or appraised value. Limited Cash-Out Refi (LCOR) Fannie B2-1.2-02 Up to 97% (primary) None Loan amount ≤ payoff + closing costs + 2% or $2K cash back. No net cash above closing costs. Cash-Out Refinance Fannie B2-1.2-03 Up to 80% (primary); 75% (2nd home); 70% (investment) 6 months PIMI payments required Borrower receives cash above closing costs. Amount is unrestricted within LTV cap.
VA Handbook Ch. 6 None stated (must cover existing balance) 210 days from first payment on existing VA loan Must be VA-to-VA. Rate must decrease (or ARM to fixed). No new cash except closing costs. VA Cash-Out (Type II) VA Handbook Ch. 6 Up to 100% of appraised value None for Type II Can refinance any loan type into VA. Full underwriting + residual income required. DSCR Cash-Out Lender-specific (e.g., Deephaven) Typically 75% max 6-12 months ownership seasoning Qualification based on DSCR ratio, not borrower income. Entity vesting may apply. Debt Consolidation Refi Fannie cash-out rules apply Same as cash-out (80% primary) 6 months Treated as cash-out. Payoff of debts at closing reduces DTI going forward.
Every decision rule in the Clarity Engine must be tied to an authoritative source, a section reference, and an effective date. This table establishes the citation hierarchy. Engineers must not implement rules without a source citation.
Mortgage fan fiction: a rule that sounds plausible, is implemented without a source citation, and is wrong in a way that only becomes visible after a repurchase request. The Clarity Engine’s explanations will be shown to borrowers and reviewed by lenders. If a rule is wrong, the lender will catch it. The borrower will be harmed. Every rule in the engine must point to: guideline family + section + effective date. If a rule cannot be cited, it must not be built.
Rule Domain Rule / Threshold Primary Source Section / Chapter Effective Date Conventional DTI Max 50% with DU approval; 45% without compensating factors; 36% manual Fannie Mae Selling Guide
March 4, 2026 Conventional LTV Max 97% HomeReady; 95% standard Conv 30yr; 90% second home Fannie Mae Selling Guide
March 4, 2026
Max 57% with AUS approval; 43% manual underwrite baseline FHA Handbook 4000.1 II.A.5.c.iv (DTI) Current edition FHA MIP (annual) 0.55% for 30yr fixed, LTV >90%, base loan >$726,200 (varies) FHA Handbook 4000.1
Current edition
1.75% of base loan amount, financeable FHA Handbook 4000.1
Current edition VA residual income By family size, region, loan amount. See Section 4.3 tables. VA Lenders Handbook (Pamphlet 26-7) Chapter 4: Credit Underwriting Current edition
41% guideline; NOT a hard cap. Residual income governs. VA Lenders Handbook (Pamphlet 26-7) Chapter 4: Credit Underwriting Current edition VA funding fee 2.15%/3.30% purchase (1st/2nd use); 0.50% IRRRL VA Lenders Handbook (Pamphlet 26-7) Chapter 8: Fees Current edition USDA income limit 115% of Area Median Income for household size USDA RD Tech Handbook Section 9-1 Current edition DSCR ratio minimum 1.00 minimum (most lenders); 0.75 for no-ratio products Deephaven / Lima One DSCR program guides Product matrix Verify per lender, monthly IPC seller concession
Fannie Mae Selling Guide B3-4.1-02 IPCs March 4, 2026 Bonus/OT income averaging 2-year average required; declining year triggers lower-year rule Fannie Mae Selling Guide
March 4, 2026 Self-employed 2yr history 2 years self-employment in same business required Fannie Mae Selling Guide
March 4, 2026 Rental income 75% factor 75% of gross rent from Schedule E or lease Fannie Mae Selling Guide
March 4, 2026 SS/disability gross-up 25% gross-up of non-taxable income Fannie Mae Selling Guide
March 4, 2026 ARM buydown caps Initial rate: +/- 2% per period, 5% lifetime for 5/1 ARM Fannie Mae Selling Guide B2-1.3 ARMs March 4, 2026
A system that overclaims is a liability. The Clarity Engine’s MVP must have explicit boundaries. These non-goals protect the product, the borrowers, the lenders, and the team.
The Engine DOES The Engine DOES NOT Why This Matters Diagnose borrower’s primary financing constraints Replace AUS (Desktop Underwriter / Loan Prospector) AUS is the lender’s tool. The engine advises; AUS decides for agency loans. Generate optimized deal scenarios with full math Make final underwriting credit decisions Underwriting decisions carry fair lending liability that requires licensed human review. Rank scenarios against borrower goals Guarantee loan approval or rate Approval is conditional on full documentation, appraisal, and lender credit review. Explain recommendations in plain language Provide legally binding loan disclosures TRID disclosures are lender obligations. Engine output is educational, not binding. Activate VA, DPA, and CRA pathways Verify identity, employment, or asset documentation Verification is a lender/servicer function. The engine uses stated inputs. Route to human advisor for validation Execute lock, commitment, or closing instructions Execution authority belongs to licensed originators and lenders. Flag scenarios requiring human review Operate without an audit trail Audit trail is a regulatory obligation, not a feature.
Every explanation Nova produces for a borrower should end with a version of this sentence: ‘These estimates are based on the information you’ve provided and are for planning purposes. Your lender will verify income, credit, employment, and property value before issuing a commitment.’ This one sentence protects the borrower from overconfidence, protects Purlend from liability, and signals to lenders that the engine is a diagnostic tool, not an underwriting replacement.
This addendum is intended to be incorporated into the existing BIX document package in the following ways:
This Document’s Section Integrates Into Integration Action Required Section 2: Program Family Matrix Architecture Blueprint (Section 2) Add Program Family Layer between Normalization and Decision Core. Each family routes to its own rules module. Section 3: DSCR Module Data Dictionary (Section 4) + Architecture Add DSCR fields to Program entity. Add DSCR entity. Add DSCR branch to Constraint Detection and Optimization Move Library. Section 4: VA Module Data Dictionary (Section 2 Borrower) + Program entity Add all VA fields. Add residual_income entity. Add VA rule set to Baseline Eligibility Engine. Section 5: Income Module Split Data Dictionary (Section 2.2 IncomeSource) Split income_type handling into 9 independent module functions. No single income_qualifying_amount bucket. Section 6: Cash-to-Close Stack Data Dictionary (Section 3.2 Deal) Add stack_sequence array to Deal entity. Calculate net_cash_from_borrower using ordered stack. Section 7: Loan Purpose Engine Architecture (Section 6 Data Flow) + Data Dictionary Add loan_purpose_branch as required routing step before Baseline Eligibility Engine. Section 8: Rule Citation Matrix Data Dictionary (Section 7 Rules Matrix) Add source, section, and effective_date columns to all rules tables. Section 9: Non-Goals Architecture Blueprint + Nova templates Add non-goals section to PRD. Add disclosure_text to all Explanation objects.
Before: strong architecture, correctness gaps in VA, DSCR, and income modules. After: ten distinct program families with incompatibility flags, VA as a first-class family with residual income math and funding fee tables, DSCR as a property-income-only branch with entity vesting support, and every rule tied to a guideline citation.
Document: Clarity Engine Program Family Matrix + VA Module + DSCR Module v1.0 | Addendum to Architecture v1.0 + Data Dictionary v1.0 | CONFIDENTIAL — PreFi, Inc. / Purpose Technology, Inc. (d/b/a Purlend)