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Gross Monthly Income
Definition
Gross monthly income is total income earned each month before any deductions for taxes, insurance, or other withholdings.
Explanation
For salaried employees, gross monthly income is annual salary divided by 12. For hourly workers, it's hourly rate × hours worked per month. For self-employed individuals, it's average monthly business revenue before expenses.
Lenders use gross monthly income (not net) to calculate DTI. They typically use the most recent pay stubs, tax returns, or employer verification to confirm income.
Example
A person earning $72,000 per year has a gross monthly income of $6,000, against which lenders measure total monthly debt payments.