QUALIFYING BORROWERS Calculating Their Income Calculating the income of a borrower is not something that the real estate agent would necessarily be required to do. However, the real estate licensee should understand the process and be able to work it through. You must first know the borrower's income. If paid hourly: 1. Hourly wages are multiplied by the guaranteed number of hours worked per week to total a weekly income. (typically a 40 -hour work week is assumed) 2. The weekly income is multiplied by 52 weeks to total an annual income. 3. The annual income is divided by 12 to total a monthly income. If salary and paid weekly: 1. Weekly wages are multiplied by 52 weeks to total the annual income. 2. The annual income is divided by 12 to total the monthly income. If salary and paid bi-weekly: 1. The salary amount is multiplied by 26 to total the annual income. 2. The annual income is divided by 12 to total the monthly income. 3. Some borrowers are paid twice monthly, so it would be X24, then divided by 12 If on an annual salary, simply divide the annual salary by 12 to total the monthly income. Overtimes wages are typically only considered if they have been steady and can be documented and the employer states the overtime is likely to continue. Generally, if a potential borrowed is a part-time employee, the lender will look to the employer's verification of employment to determine the average number of hours worked per week and the likelihood of continued employment at the same number of hours per week. EXAMPLE: Jim makes $12.25 per hour and his wife, Jessie, makes $13.10 per hour. They both work 40-hour work weeks. JIm=$12.2540=$490,$490X52=$25,480,$25,48012=$2,123.33 per month Jessie =$13.1040=$524,$52452=$27,248,$27,248+12=$2,270.67 per month $2,123.33+$2,270.67=$4,394 Combined monthly income So, based on the above information, calculate the monthly incomes for the following potential borrowers: 1. Bob \& Bobbi Bob makes $8.50 per hour and works a normal 40 hour workweek. Bobbi grosses $350.00 per week. Bob's monthly income: Bobbi's monthly income: Their combined monthly income: 2. Bert and Emestine Bert and Emestine are both warehouse supervisors. Bert makes $17.15 per hour and Emestine makes $18.25. Both work 40 hour work weeks. Bert's monthly income: Emestine's monthly income: Their combined Monthly income: 3. Lenny and Lorri Lenny and Lorri are young professionals. Lenny has an annual salary of $72,500. Lorri also has a pretty good job with a salary of $2,200 every two weeks. Lenny's monthly income: Lorri's monthly income: Their combined monthly icome: 4. Barbara Barbara is a nurse and makes $37.50 per hour. She works 10-hour shifts. Her schedule is great: just 3 days one week and 4 days the next in a constant rotation like that. She's paid every two weeks. Barbara's monthly income