Two years of stable gains
Use signed returns and Schedule D, then verify the portfolio remains available after closing.
Direct answer
Capital gains are not automatically qualifying income. A borrower generally needs a documented recurring history, evidence supporting continuance and sufficient eligible assets after accounting for funds needed to close and reserves.
Capital-gains income test
- Identify which gains are recurring income versus one-time asset sales.
- Collect complete personal tax returns and schedules for the required history.
- Trace the assets that generated the gains and verify current ownership and value.
- Subtract assets needed for down payment, closing costs and required reserves.
- Apply the agency calculation and document why continuation is reasonable.
Continuance test
| Question | Evidence | Result |
|---|---|---|
| Were gains recurring? | Tax returns and Schedule D | Establishes history |
| Do generating assets remain? | Current statements | Supports continuance |
| Will closing consume them? | Funds-to-close worksheet | Determines remaining base |
Apply Fannie Mae’s 2026 capital-gains test
Fannie Mae B3-3.4-05 treats capital gains as generally one-time income. When gains are needed to qualify, the lender obtains the most recent two years of signed personal federal returns including Schedule D and evidence that the borrower still owns a portfolio that can support future mortgage payments.
The March 2026 guidance requires a minimum two-year history. For stable or increasing gains, it describes a two-year average; for decreasing gains, it describes using the most recent year. Capital losses on Schedule D do not have to be treated as recurring liabilities under that section.
- Separate recurring portfolio activity from one-time sale events.
- Verify the remaining portfolio after funds to close and reserves.
- Match Schedule D transactions to current ownership evidence.
- Use the agency trend method; do not project market performance.
Florida decision cases
Most recent year declined
Apply Fannie Mae’s current decreasing-trend method rather than a more favorable two-year average.
One-time property sale
Do not label a nonrecurring liquidation as stable capital-gains income without satisfying the guide’s history and portfolio tests.
Use: identify the closest case, collect the named evidence, and have the lender apply the current agency section to the complete borrower and property file. These cases illustrate decision paths, not approval outcomes.
Joe’s Advice
“Selling an asset for the down payment can weaken the same asset base offered to support future capital-gains income. Model both uses before the contract is signed.”
— Joseph “Joe” Pistone, NMLS# 2087918
Current primary sources
Current agency guidance and the complete loan file control. Lender overlays and automated-underwriting findings may add requirements.
Frequently asked questions
Are capital gains normally stable qualifying income?
No. Fannie Mae describes them as generally one-time; using them requires the specific history, documentation and asset-ownership test.
How many years of capital-gains history does Fannie Mae require?
B3-3.4-05 states a minimum two-year history and requires the most recent two years of signed personal federal returns including Schedule D.
How are decreasing capital gains calculated?
The cited 2026 Fannie Mae section describes using the most recent year when the historical trend is decreasing.
Must the investment portfolio remain after closing?
The lender must document ownership of a portfolio that can support future payments, so assets consumed by closing must be considered.
Can an expected stock-price increase be counted?
No. Qualification is based on documented historical income and eligible current assets, not projected market performance.
Review the actual Florida file
Bring the address, contract, income and asset records, debts, property documents and questions that apply to the transaction.
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Educational information only; not legal, tax or investment advice, a rate quote, approval, commitment to lend or guarantee of closing. Eligibility, documentation, pricing, payment, cash to close and timing depend on the complete application, property and current program requirements.