Why do they use gross income instead of net?

[Anonymous]

I mean I'm glad they do, but it seems odd.  I'd be pretty good if I got to keep all the money I earn, but alas that is not reality.

Why would you count money to pay back stuff he's not gonna have?  Dang they take it RIGHT OUT OF MY CHECK, I'm never gonna see it!

I had to turn over 3 years of 1040s, so I guess they get the real numbers from there and figure out if I can repay the note?

[1GaDawg85]

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@Anonymous wrote:

I mean I'm glad they do, but it seems odd.  I'd be pretty good if I got to keep all the money I earn, but alas that is not reality.

Why would you count money to pay back stuff he's not gonna have?  Dang they take it RIGHT OUT OF MY CHECK, I'm never gonna see it!

I had to turn over 3 years of 1040s, so I guess they get the real numbers from there and figure out if I can repay the note?

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Yes they do, they use W-2 information to consider how much you can afford

[ezdriver]

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@Anonymous wrote:

I mean I'm glad they do, but it seems odd.  I'd be pretty good if I got to keep all the money I earn, but alas that is not reality.

Why would you count money to pay back stuff he's not gonna have?  Dang they take it RIGHT OUT OF MY CHECK, I'm never gonna see it!

I had to turn over 3 years of 1040s, so I guess they get the real numbers from there and figure out if I can repay the note?

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Because gross income is the more dependable/stable number available for lenders' use. Net income is affected by many factors controlled by the wage earner. Not so the gross income.

[DallasLoanGuy]

taxes are already considered by the current debt ratio restrictions.

if we used net, we would allow higher debt ratios.

doesnt matter either way.

[Anonymous]

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@DallasLoanGuy wrote:

taxes are already considered by the current debt ratio restrictions.

if we used net, we would allow higher debt ratios.

doesnt matter either way.

 I see.  

[HiLine]

I don't think there is a real reason.

Why are prices of goods listed as before sales tax while price after tax is what you pay?

No reason really.

[vanillabean]

There are societies, whose education, healthcare and retirement systems are largely taxpayer-funded and tipping is included; the US is not one of them. Such a difference completely changes the balance of one’s net income.

I’d rather not spend more time on such matters than needed; just splitting a restaurant bill, not to mention figuring out the dollar equivalent of an income tax allowance, gives me a headache.