Fannie Mae Foundation: How to Buy a Home

1. Explain the concept of gross annual income. Bring in one or two sample paychecks. (Or find samples in commercial workbooks for adults.) Show students how to find the gross income. If the check is a monthly payment, they will multiply the amount by 12. If it is a biweekly check, they will multiply by 24, 25, or 26, depending on whether they work during holidays.

2. Ask students how often they are paid. Is it monthly? Weekly? Biweekly? For each example, write on the board the mathematical process for calculating the monthly and annual salary. Have students either calculate their own annual gross income or make one up to calculate.

3. Discuss briefly the difference between gross and net pay, the amount of money you “take home.” Without turning the lesson into one on employment benefits and taxes, briefly show what is taken out of your sample paychecks. For example, federal taxes, Federal Insurance Contribution Act (FICA), Medicare, and health insurance payments are taken out of many checks.

4. Go over each of the two sample problems on page 12 of the student workbook. Then ask students to solve the problems on their own or in pairs. Review the correct answers with the class.

Going further
If students have trouble with thebasic math skills required for this page, find simple multiplication practice exercises in commercial adult mathematics texts.

Unit 1 : Lesson 2: Getting money to buy a home

Working with numbers

When you apply for a loan, you will have to provide information about your income. Lenders will want to know your gross annual income. This is your yearly income before taxes and other benefits are taken out. It also includes any other money you make from part-time jobs, overtime, bonuses, interest you earn on your savings, and any other kind
of income you receive regularly.

Your gross income is not the same as your take-home pay. On your paycheck, your gross income is usually the largest amount. Your take-home pay — what you take home after taxes, insurance, and other costs are taken out — is a smaller amount. You can often find that amount in the upper right-hand corner of the pay stub.

You will often find you have to use addition, multiplication, and division to come up with the information you need to fill out housing-related applications. Here are some examples of math problems related to filling in information about your income.

Example 1:
Joe Ramirez had a gross income of $725 twice a month. How much does he earn each month? Hint: Take the gross pay and multiply by 2.

Answer: $1,450

Example 2:
Teresa Ramirez made $8,640 annually at her job at Grant’s Grocery. How much did she make each month? Hint: Take the gross annual salary and divide by 12.

Answer: $720

Now try these problems:

Previous Page | Next Page