Gross Income vs. Net Income for buying a home or car. Why isn't Net Income used?

Gross Income vs. Net Income for buying a home or car. Why isn't Net Income used? Asked by ~*casron*~ 50 months ago Similar questions: Gross Income Net buying home car Business > Financial Planning.

Similar questions: Gross Income Net buying home car.

Credit reporting When you go to ask for a mortgage or auto loan, they already know how much money you owe and what your payments are - they have your credit report. They use your AGI - adjusted gross income, from your form 1040, as the most reliable indicator of how much money you have coming in. It's just something they plug into a formula that tells them how much money they can afford to lend you.It is a more reliable number than your net income, which includes deductions, because those fluctuate from year to year.

If you are paying down a mortgage, you pay more interest on the loan in the early years, so your deduction is higher, and so is your net income, for example. However, your AGI does not include the deduction, so it's a less variable number. Sources: My father was an accountant IchtheosaurusRex's Recommendations J.K. Lasser's 1001 Deductions and Tax Breaks 2007: Your Complete Guide to Everything Deductible (J.K. Lasser) Amazon List Price: $17.95 Used from: $9.88 Average Customer Rating: 4.5 out of 5 (based on 3 reviews) These vary .

Gross income is more standard across the board There are various ways you can affect the deductions from your pay, including asking for extra tax deductions, pensions etc. This means that gross income is standard among all employees, and therefore directly comparable. The formulas that the financing companies use will take into account the minimum tax payments that they expect would be deducted from your pay. If you had extra taken off, they will still let you buy the same amount of car as someone who didn't.

Financing companies will always lend you more money than you can really afford. They do this with the knowledge that most people will pay for the car, or whatever it is, even if it is at the expense of something else they have to pay. Make sure you do your own budget to see that you can afford what you are planning to pay, do not depend on the financing company to protect your interests.

Sources: my opinion .

Because that allows the loan officer to better determine how much is really available He has all the tax tables, property tax values and all the rest available. In fact, one of the things the loan officer does is determine your net income. clemson.edu/psapublishing/pages/FYD/EC67... use other guidelines to determine how much money they will lend a prospective homebuyer.

These guidelines are based on the borrower’s ability to repay and vary among lenders. Lenders may allow 28-29 percent of the buyer’s gross monthly income for the mortgage payment (PITI). Lenders also consider total debt load (mortgage plus installment debt and credit card debt owed at the time of the mortgage loan application) when evaluating a mortgage application.

Conventional lenders usually limit the total debt load to a maximum of 36 percent of gross monthly income. This is a very useful PDF. I just bookmarked it.

Sources: My answer .

1 They wast as many as possible to qualify.

2 Gary4books............ can you explain a bit more please.

Gary4books............ can you explain a bit more please.

Can you deduct the entire amount of dental expenses once you have reached the 7.5% of adjusted gross income" "A paycheck of $327 gross, $8 net. Is that legal? " "What is the difference between net and gross advertising rates?" "Is Obama's $250K cap on small business income gross income or net income after all business expenses are paid?

" "how to get a car loan with no proof of income" "Gross income vs. Net income" "In your opinion what is a fair yearly gross income? Before taxes." "What do I need to know before buying my first home? " "Can I delay depositing checks until after Jan. 1st to reduce my adjusted gross income?" "is vacation 4% calculated from gross or net?

Can you deduct the entire amount of dental expenses once you have reached the 7.5% of adjusted gross income.

A paycheck of $327 gross, $8 net. Is that legal?

How to get a car loan with no proof of income.

I cant really gove you an answer,but what I can give you is a way to a solution, that is you have to find the anglde that you relate to or peaks your interest. A good paper is one that people get drawn into because it reaches them ln some way.As for me WW11 to me, I think of the holocaust and the effect it had on the survivors, their families and those who stood by and did nothing until it was too late.