Income Calculator | The Everyday Underwriter MasterClass

💼W-2
Employee

🏢Self-
Employed

⚡Multiple
Sources

🎯Retired /
Fixed

W-2 / Salaried Employee Income

How underwriters calculate income from regular employment

Base Income

Pay Frequency

Base Pay Per Period

Bonus & Overtime (2-Year Average)

Year 1 Bonus/OT

Year 2 Bonus/OT

Use Bonus / Overtime in Qualifying?

Additional W-2 Employment (if any)

Second Job Monthly Income

Qualifying Income Analysis

Monthly Qualifying Income

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Annual Qualifying Income

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Bonus/OT Monthly Avg

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Base monthly income—

Bonus/OT monthly avg—

Second job income—

Total qualifying income—

Underwriter's Note

Bonus and overtime income requires a 2-year history documented on W-2s. I use the 2-year average. If bonus income is declining year over year, I use the lower amount.

Self-Employed / 1099 Income

How underwriters calculate qualifying income from tax returns

Net Income from Tax Returns (Schedule C or Business Return)

Year 1 Net Income (most recent)

Year 2 Net Income (prior year)

Add-Backs (items that reduce taxable income but are allowable)

Depreciation (annual)

Business Use of Home

Mileage / Vehicle (annual)

One-Time Non-Recurring Losses

Income Trend

Income Direction Year Over Year

Qualifying Income Analysis

Monthly Qualifying Income

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Annual Qualifying Income

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2-Year Average

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Year 1 net income—

Year 2 net income—

Total add-backs—

Qualifying method used—

Annual qualifying income—

Monthly qualifying income—

Underwriter's Note

Multiple Income Sources

Combine all qualifying income types for your total picture

W-2 / Salaried Income

Monthly Base Salary

Monthly Bonus / OT (2-yr avg — only if consistent)

Self-Employment / 1099 Income

Monthly Self-Employment (from 2-yr tax avg)

Other Qualifying Income

Social Security (monthly)

Pension / Retirement (monthly)

Rental Income (75% of gross)

Alimony / Child Support (monthly)

Investment / Dividend Income (monthly avg)

Total Qualifying Income

Total Monthly

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Total Annual

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Active Sources

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Underwriter's Note

Rental income is counted at 75% of gross to account for vacancy and maintenance. Alimony and child support must be documented in a divorce decree and must continue for 3+ years. Investment income requires 2-year history on tax returns.

Retired / Fixed Income

How underwriters calculate qualifying income for retirees

Social Security Income

Monthly Social Security Benefit

Is this income tax-exempt? (affects gross-up)

Pension Income

Monthly Pension Payment

Retirement Account Distributions

Monthly IRA / 401(k) Distribution

Retirement Account Balance (total vested)

Other Fixed Income

Monthly Annuity

Monthly Investment Income

Qualifying Income Analysis

Monthly Qualifying Income

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Annual Qualifying Income

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SS Gross-Up (if applicable)

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Social Security (effective qualifying)—

Pension—

IRA / 401(k) distribution—

Annuity / investment—

Total monthly qualifying income—

Underwriter's Note

Non-taxable Social Security income can be "grossed up" by 25% by most lenders — meaning I count $1.25 for every $1.00 you receive. Income must continue for at least 3 years. Retirement account distributions count if they are established and documented.

DISCLAIMER: This calculator is for educational and informational purposes only. Results are estimates based on general underwriting guidelines and do not constitute a loan approval, pre-approval, or commitment to lend. Actual qualifying income calculations vary by lender, loan program, and individual circumstances. Consult a licensed mortgage professional for your specific situation.
Jennifer Heller | NMLS# 2375826 | The Everyday Underwriter, LLC | Equal Housing Lender
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