Declining self-employed income
A two-year average can overstate what a declining business is producing today.
Trend analysis
Both agencies require the lender to analyze whether business income is stable and likely to continue. The analysis should consider year-over-year movement in gross receipts, expenses and taxable income—not just average two tax-return bottom lines.
Current performance can matter
When stability is uncertain, current-year financial statements or recent business bank statements can help demonstrate whether the decline has stabilized, continued or reversed. Freddie expressly identifies these documents as tools that may support business and income analysis.
Official guide baseline
Fannie Mae Selling Guide · Freddie Mac Seller/Servicer Guide
Agency guide and AUS findings control. Tax-return, business-analysis and lender-overlay requirements can change the usable income.