Gross Monthly Income
Your income before taxes and deductions, measured per month (annual income divided by 12). Every DTI ratio lenders use is based on gross, not take-home, income.
A common mistake is to run affordability math on take-home pay, then wonder why a lender quotes a larger number. Lenders qualify on gross income because it is consistent and easy to verify from pay stubs and tax returns, while deductions vary from person to person.
Variable income deserves care. Bonus, commission, and self-employment earnings are often averaged over about two years and may be discounted if they are not stable or trending up. That can make your qualifying income lower than a single strong year suggests. Because gross income drives every DTI ratio, understanding how a lender will count yours sets realistic expectations before you apply. Rules vary by lender and loan type.
Used in these calculators
Guides that put this term to work
Related terms: Debt-to-Income Ratio (DTI) , Front-End DTI , Net Monthly Income , The 50/30/20 Rule
Last updated . Part of the FinExplained finance glossary .