Net income is equal to the income that a company has after subtracting costs and expenses from the total revenue. Net income can be distributed among holders of common stock as a dividend or held by the firm as retained earnings. So self employed borrowers this is the income number you pay taxes on and is used for qualification purposes on loans. There are some items that can be added back in to the equation when figuring qualifying income. Consult your Bailey & Wood Mortgage Consultant for more details.