Net vs. Gross Pay

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  • #62839
    OliveJames
    Member

    I was submitting paystubs and I noticed that it was asking for net pay and not gross pay. I just want to confirm that they do use Gross pay and not net pay for affordability. Thank you!

    #62844
    Nelsont
    Member

    They do use gross pay for calculating affordability. But they also use net pay to help figure out your DTI because you may have child support, alimony, garnished wages, 401k loans, etc. They want to get the whole picture.

    #62845
    OliveJames
    Member

    Other questions regarding uploading Documents: What category do cancelled checks for rent go under? and do we need to submit statements from HSA (Health spending accounts) and Dependent care spending accounts?

    #62846
    Nelsont
    Member

    The web file I think has changed a little bit recently but, I would imagine they go under rent verification. You can always ask your MC or email them to your naca lynx email address and copy your MC. As far as your insurance documents I would take all of that with you to your intake appointment. Your MC can determine if it’s necessary and upload them during your appointment.

    #62847
    OliveJames
    Member

    Thank you for your response! So for calculating DTI they use net pay? if that is the case it would change things quite a bit.

    #62848
    Nelsont
    Member

    No. Your DTI is based on gross pay. It is possible you have significant deductions from your gross pay that would affect your DTI. A 401k loan or child support would be examples. Other than that net pay doesn’t factor into the equation.

    #62858
    TTrumble
    Member

    Hello OliveJames,

    Net income is used for calculating cash flow, which is one of the factors in determining affordability.

    Your net income less your monthly expenses equals the amount of money you have available each month. This calculation can help determine how large a mortgage payment you can afford, especially if you are looking for a mortgage payment larger than your current rent, by showing just how much money is actually available each month.

    Tim Trumble
    Online Operations, NACA
    ttrumble@naca.com

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