Our bank was using 1.395% to "gross-up" the income of an applicant receiving public assistance. Has the percent changed recently with the change in tax rates?

I've seen 1.5% being used for the last several years.

Might depend on whether your state has a state income tax. Since Texas does not, your figure seems reasonable to me. Anyone else seen something different?

I think we have a decimal point problem here. I think you mean 1.395 times (1.395x)and 1.5 times (1.5x) respectively.

$1,000 x 1.395% = $ 13.95 for a gross-up total of $1,013.95

Hardly seems worth the effort. I think you mean $1,395

We use 1.25x.

Here is part of what the Fannie Mae Single Family Selling Guide says in part X, Chapter 402 -
"If the income is nontaxable and the income and its tax-exempt status are likely to continue, the lender may develop an "adjusted gross income" for the borrower by adding an amount equal to 25% of the nontaxable income to the borrower's income. If the actual amount of federal and state taxes that would generally be paid by a wage earner in a similar tax bracket is more than 25% of the borrower's nontaxable income, the lender may use that amount to develop the "adjusted gross income." This adjusted gross income should be used in calculating the borrower's qualifying ratio."

Thanks Al, the decimal was off in my post. And thanks everyone else for the input. Prior to hearing from all of you, I thought there was one standard way of grossing up.