Hourly

• If a borrower earns $20 an hour and works 40 hours per week, the lender multiplies $20 times 40 hours per week, which is $800 per week. The lender then multiplies $800 times 52 weeks in a year, which equals $41,600. The lender then divides $41,600 by 12 months in a year, which equals a gross monthly income of $3,466.67.
  
  

Bi-Weekly

• Some borrowers receive a salary on a bi-weekly basis. Bi-weekly simply means being paid every other week, such as every other Friday. This results in 26 pay periods a year. Borrowers who receive a bi-weekly salary sometimes receive three paychecks in a month. Even though the borrower is normally paid twice a month, the lender must calculate the income so it includes the income paid on the three pay period months. If the borrower earned $1,600 bi-weekly, the lender multiplies $1,600 times 26 which equals $41,600, then divides by 12, for a result of $3466.67.
  
  

Semi-Monthly

• If a borrower is paid semi-monthly, that means the borrower receives a paycheck 24 times a year. Often employers who pay semi-monthly pay their employees either on the first day of the month or the last day of the month and on the 15th of the month. If a borrower is paid $1,733.33 semi-monthly then the lender multiplies $1,733.33 times 24, which equals $41,600 and then divides the sum by 12 to calculate the monthly income of $3,466.67.
  
  

Self Employment

• Lenders calculate self employment income very differently than employment income. The borrower must provide two-years of personal and business tax returns. The lender reviews the tax returns and calculates the income based upon those returns. The borrower cannot qualify with gross receipts. The borrower qualifies on the net income after expenses. Even if the borrower sold $1,000,000 worth of new products or services, if the borrower wrote off $1,000,001, he would not qualify for a mortgage.