Income Requirements

What it controls: Minimum gross monthly income required as a multiple of rent.

Default Setting: 3x monthly rent

Common Range: 2x to 3x monthly rent

Example: For a $2,000/month rental at 3x:

• Required monthly income: $6,000

• Required annual income: $72,000

Why Gross Income (Not Net)

Gross income is the simplest and most widely accepted way to measure income for qualification purposes. It’s the figure used in employer-issued pay stubs, employment verification forms and offer letters, and mortgage industry income calculations. Using gross income provides a clear and consistent baseline for evaluating all applicants, which is essential for fair and reliable screening.

1. Consistency: Net income can cary widely based on several factors:

   1. Federal and state tax withholding elections

   2. Pre-tax benefit contributions (401k, HSA, FSA)

   3. Post-tax deductions that vary by employer

   4. State tax differences

2. Industry Standards and Risk Models: Industries that rely on income-to-obligation ratios use gross income as the baseline metric. This ensures:

   1. Predictable and consistent risk modeling

   2. Simple, transparent qualification ratios

   3. Alignment with broader financial and housing industry practices

3. Fairness: Net income varies based on personal decisions that don’t reflect ability to pay. Gross income avoids those differences by preventing applicants from being penalized for:

   1. Choosing to save for retirement or contribute to an HSA/FSA

   2. Carrying health, dental, or vision insurance

   3. Supporting dependents through higher benefit or tax elections

Alternative: If you're concerned about take-home pay, increase your gross income multiplier (e.g., from 3x to 3.5x) rather than switching to net income calculations.