How to estimate monthly income and debt for mortgage pre-qualification

Animated calculatorThis tutorial will explain the operation of the income and debt calculator.
See Income and Debt Calculator

Estimating monthly income can be difficult for the loan officer and underwriter because many people do not work 40 hours each week; and some folks are paid every other week, some people only put in 37.5 hours and some people have such an inconsistent work schedule, that the monthly income can only be calculated with a year to date calculation. The income calculator will estimate monthly income based on different payment plans.

The debt screen will determine the monthly debt payments that will be included in the debt to income ratio. The monthly debt can be ticked to be paid off, ignored or included in the debt to income calculation.

Income calculator


After entering the income in the boxes and "ticking" the "Add to Total" box, the monthly income will be combined to generate the total monthly income and display the monthly debt ratio.

Year to date calculator 


Mortgage loan officers and underwriters will use a year to date calculation to determine the applicant's monthly income. Enter your GROSS income in the Year to Date Income box. Enter the start date for the year. If you have been employed with the company the entire year. Leave the Start Date at January 1, 20xx. If you started working for the company on March 1, 20xx, enter that date in the Start Date. The End Date is the most recent pay ending date. Tick the Add to total to add the monthly income

Gross monthly income 


Some people are paid weekly, twice a month or every other week. Enter your GROSS income in the Income box and choose the pay frequency to estimate the monthly income.

Hourly rate 


This calculator converts an hourly rate into an estimated monthly income. Simply enter the hourly rate and choose the number of hours in a week.

Income average 


This calculator will average two incomes (i.e. unemployment compensation). Enter the incomes and choose the division term. To obtain an average monthly unemployment over a two year period, divide by 24 months.

Monthly gross-up 


Some non-taxable income can be "grossed" up, generally by 20%. Enter the non-taxable income and choose the gross up percentage.

Debt calculator

Monthly debt 

The debt side of the calculator will add up the monthly debt.

Each debt obligation can be checked to be paid off, ignored or left intact. After listing the monthly debt, and completing the income screen, the calculator will estimate the debt to income ratio.