**To figure out salary**

Base Annual Salary **/ **12 **=** monthly income

Base Monthly Income if paid 2x per mo (24x per year) **=** monthly income

Base Bi-Weekly Income **x **26 **/ **12 **=** monthly income

Base Hourly Rate **x** 40 **x** 52 **/** 12 **=** monthly income (assumes 40 hrs per week)

DO NOT USE ANY OTHER METHOD (i.e. 4.2, 4.3 or 4 wks) as these will not be accurate

Hourly OT use base rate **x** 1.5 **x** OT hours per week **x** 52 **/** 12 **=** monthly OT income (assumes 2 year history)

<10 months payments typically do not need to count

Gross Up for non-taxable Conventional **= x** 125% or 25% or 1.25 however you want to enter into your calculator

TIP: Must always figure annual then **/** 12, unless already given monthly, i.e. 24 pay periods per year.

**/ = divided by**

** **

**(see examples below)**

** **

**RE: LTV**

When figuring out the LTV (Loan to Value ratio) for a property, you will always divide the loan amount by the LOWER of the appraised value or sales price.

Example:

Tyler and Erin are looking to purchase their first home. Tyler makes $23.50 an hour and works 40 hours per week. Erin makes $21.50 per hour and works 40 hours of regular time and 5 hours of overtime a week. How much income do each of them make in any given month?

Answer:

Tyler: 23.50 x 40 = 940 (weekly wage) x 52=$48.880 (annual wage) /12 = 4,073.33 monthly

Multiply the hourly wage by the number of hours worked each week, then multiply that number by 52 to get the annual income. After you get that number, divide it by 12 to get the monthly amount. You have to do it this way because each month has a different number of days and this gives you the average.

Still Stuck? Feel free to send an email to instructor@mortgageeducators.com and one of our course instructors can try and help answer any content related questions for you.

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