Gross Monthly Income
Quick Answer
Gross monthly income is total income earned each month before any deductions for taxes, insurance, or other withholdings.
Definition
Gross monthly income is total income earned each month before any deductions for taxes, insurance, or other withholdings.
Explanation
For salaried employees, gross monthly income is annual salary divided by 12. For hourly workers, it's hourly rate × hours worked per month. For self-employed individuals, it's average monthly business revenue before expenses.
Lenders use gross monthly income (not net) to calculate DTI. They typically use the most recent pay stubs, tax returns, or employer verification to confirm income.
Example
A person earning $72,000 per year has a gross monthly income of $6,000, against which lenders measure total monthly debt payments.
Frequently Asked Questions
What is Gross Monthly Income?
Gross monthly income is total income earned each month before any deductions for taxes, insurance, or other withholdings.
How does Gross Monthly Income work?
For salaried employees, gross monthly income is annual salary divided by 12. For hourly workers, it's hourly rate × hours worked per month. For self-employed individuals, it's average monthly business revenue before expenses.Lenders use gross monthly income (not net) to calculate DTI. They typically use the most recent pay stubs, tax returns, or employer verification to confirm income.
Can you give an example of Gross Monthly Income?
A person earning $72,000 per year has a gross monthly income of $6,000, against which lenders measure total monthly debt payments.
Free Excel Templates
Also try our free Budget Planner template
Create and manage your monthly budget with the 50/30/20 rule. Track income, expenses, and savings in one place.
Download Budget PlannerAlso try our free Home Affordability Calculator template
Calculate the maximum home price you can afford. Analyze mortgage payments, DTI ratios, and down payment impact on affordability.
Download Home Affordability Calculator