Calculating Monthly Income On A Home Loan Application

Added June 6, 2004 by ThinkGlink.com staff

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Summary: When applying for a home loan, how should monthly income be calculated? This home buyer's income included stipends and overtime that added to their gross income, so what should be reported on the home loan application? Bringing in a copy of your income tax return will ensure you report the correct income on your home loan application.

Q:I'm about 25% of the way through "100 Questions Every First-Time Home Buyer Should Ask," and I'm so grateful I purchased your book.

Regarding figuring out our gross monthly income (GMI), I have a question for you. My wife made 67,000 last year as a teacher, but that included two separate stipends and overtime she worked during summer.

Any particular monthly paycheck would probably not project a yearly income of $67,000. So, should I just divide her 67,000 by 12 to get her portion of our GMI or should I first remove the stipends and overtime pay?

A: Is your wife going to teach again this summer? That's what a lender will want to know. You have two choices. You can bring in a copy of your tax return that shows all of your income, or you can simply use your wife's regular income as the income on which you qualify. Talk to a local lender about what he'd like to see.

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