Does my mortgage use gross pay or take-home pay? What about a raise?

During a file review, I found take-home pay entered where gross pay was needed. We were also checking a recent increase in base pay.

Both details could change the numbers. But they needed to be handled separately.

Correcting the paycheck figure is one step. Getting the lender to accept a raise is another.

Know which paycheck number we are using

Mortgage qualification generally starts with eligible income before payroll deductions. That is different from the amount deposited into your checking account.

I would separate fixed base pay from overtime, bonuses, commissions and changing hours. A larger deposit might reflect a raise. It might also reflect a reimbursement or an unusual pay period.

We need to know which it is.

Verify the raise before relying on it

If higher pay is part of the purchase plan, ask what employer confirmation and pay records the lender needs.

Then ask a direct question: has the new income been accepted, or is it still being reviewed?

A proposed purchase budget should not quietly assume that review is already finished.

Use take-home pay to check your comfort level

The lender's income calculation answers a qualification question. Your bank account helps answer a different one:

What payment fits after payroll deductions, savings and everyday life?

I would look at both before raising the home-search budget.

1. Confirm the gross income the lender can use.
2. Confirm whether the raise is included.
3. Review the resulting housing payment.
4. Compare that payment with what you actually bring home.

A corrected income figure can open up options. It does not mean you need to spend up to the new maximum.

This example is based on a real mortgage discussion with identifying information removed. Any numbers are illustrative and are not current loan terms or a commitment to lend. Loan programs, rates, property values and borrower qualification vary.

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