Overtime, Commission, and Bonus Income

 In Common Questions, Qualifying for a Mortgage

Many people are paid overtime, commission, or bonus income.  What are the rules for counting that income when you apply for a mortgage?  

Here’s what you need to know.

Qualifying for a Home Loan

For all three of these types of income – overtime, commissions, and bonuses – a borrower typically needs to have worked for two years for the same employer in order to count the income.  Regular base pay, whether you are paid a salary or paid hourly, can usually be counted as soon as you have a job.  However, when it comes to overtime, commissions, or bonuses, a lender wants to know if that income will continue before they allow it to be used to qualify for a home loan.

If you have earned overtime, commissions, or bonuses for the past two years, a lender will then average those types of income over the past two years, and that’s how much they will count as qualifying income.  

Exceptions to The Rule

There are exceptions to this rule, however.  Depending on the type of work and whether overtime, commissions, and bonuses are common in that industry, you may be able to get away with less than two years of receipt of that income.  There are no hard and fast rules regarding this exception, so it’s impossible to say whether a lender will be able to count it without knowing all the details, but you shouldn’t let the fact that you haven’t received these types of income for a full two years to keep you from applying for a mortgage.  A lot of the decision is dependent on how strong the rest of the loan file is.  If you have excellent credit and assets (money in the bank), you have a much better chance of being allowed to count the income.

Overtime, Commission, Bonus Income

If you are in doubt about whether your overtime, commission, or bonus income can be used to qualify, contact us and we will be able to tell you the best way to get approved.  Most of our clients are pleasantly surprised at how easy it is to get a mortgage for a home purchase, or to refinance your current loan.  Contact us today.

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