TItle explains it all. I was recently prequalified for a mortgage, but i thought it was really weird how they looked solely at my gross income and not my pay after taxes.
Because i have insurance, taxes, and 401K taken out of my gross pay, my take home is like 60% of my gross.
Insurance, Taxes, and 401k, are all (somewhat) within your control.
You could choose to go without insurance, or 401k contributions. You could adjust your withholding on your taxes to reduce the amount taken out.
Whereas gross income is a fairly static amount (until you get that next raise, or demotion).
The bank is also factoring some expenses in, like taxes. They may assume people in a certain income range are going to pay 15% in taxes, for example.
If you happen to be more or less than the assumption, it’s not a huge difference. Using gross pay also prevents scenarios like qualifying someone based on a tax credit they stop being eligible for, or disqualifying someone because they set their withholding too high.