(a) Maximum income will be determined with respect to each mortgagor's application on the basis of the mortgagor's 1983 tax year with respect to applications received on or before April 15, 1985, and on the mortgagor's 1984 tax year with respect to applications received after April 15, 1985, the total annual income of the mortgagor from whatever source derived and before taxes or withholding together with the total annual income from whatever source derived and before taxes or withholding for the immediately preceding taxable year of all persons who intend to permanently reside with such mortgagor in the same dwelling (the mortgagor and such other person(s) intending to permanently reside in the same dwelling being hereinafter referred to collectively as "household members"), less the total of credits computed in accordance with the following:

1. (1) a credit in an amount equal to $1,000 for each household member other than the head of the household;
2. (2) a credit in an amount equal to all earnings of any household member who is under 18 years of age or who is physically or mentally handicapped, as determined on the basis of medical evidence from a licensed physician;
3. (3) a credit in an amount equal to medical expenses of household members, not compensated for or covered by insurance, in excess of 3% of such total adjusted gross income;
4. (4) a credit in an amount equal to one-half (1/2) of the total earnings of all household members over 18 years of age who are secondary wage earners in the household, other than the spouse or the head of household; provided however, that such credit shall not exceed the sum of $2,500; and
5. (5) a credit in an amount equal to all income of any household member of an unusual or temporary nature and not related to such household member's regular employment, as determined by the lending institution in accordance with this section shall not mean investment earnings.