13Pay that moves
Commission, bonus, and overtime: what actually counts toward a mortgage
If a good share of your pay arrives as commission, a bonus, overtime, or tips, you have probably been told it does not count. It counts when there is a history behind it, and the lender uses an average rather than what you are earning this month.
The direct answer
It counts when there is a history. Fannie Mae’s rule for bonus, commission, overtime and tip income recommends a minimum two-year history of the same kind of pay, and allows a shorter period, but no less than 12 months, where positive factors reasonably offset it.
Direction decides the rest. Where the income is stable or increasing, the lender averages year-to-date earnings with last year’s over the months those documents cover, at least 12. Where it is decreasing, the lender must confirm the level has stabilized, and if it cannot, the income is not eligible at all.
Talk it through with Zach first
Text Zach three things: your base pay, what the variable pay came to in each of the last two years, and how long you have been with this employer.
Text or call (949) 537-1260This is a direct line to Zach’s cell. Text anytime; when he is available he usually replies within minutes.
- No forms to fill out first. Bring the rough numbers and Zach does the rest.
- No credit pull happens from a conversation. Any check comes later, with your say-so.
- If a home equity line is part of the answer, check your HELOC options online with no impact on your credit score for the initial check.
“He was very knowlegeable about different options and helped us choose what worked best for us!”
What clients consistently mention
- Responsive and easy to reach
- Explains the process clearly
- Patient guidance through decisions
- Finds options that fit the situation
Read the reviews on Experience.com
Read on 2026-09-10. General service reviews; they do not prove a result for your situation or point to a particular lender.
Zach von der Linden, Mortgage broker and Branch Manager, West Capital Lending. Based in Irvine, California.
Is this page about my situation?
Variable pay is normal work. Sales runs on commission, trades and nursing on overtime, hospitality on tips, and plenty of salaried jobs pay part of the year in a bonus.
The lender is asking what it can reasonably expect to keep arriving, and it answers with an average drawn from documents. In a strong year that average sits below your current pace, and the gap is arithmetic rather than an insult.
Base and variable pay both count when documented. The variable part is where the history test and the averaging test live, so it is the part worth getting right before you write an offer.
Rates as low as prime may be available for qualifying borrowers in eligible programs. Your rate and costs depend on your credit, combined loan-to-value, selected loan and program terms, and applicable fees. That sentence is about home equity lines. This page carries no rate, payment, or loan amount, because the question here is what income figure your file starts from. Everywhere else on this site a new loan is illustrated over 30 years. A note rate is not an APR.
Does this fit you?
Who this tends to fit
- A real share of your pay is commission, bonus, overtime, or tips, and you want the number before you shop.
- You have been paid this way for two years or close to it, in the same line of work.
- Your pay has been steady or climbing, or it dipped and has since levelled off and you can show when.
The eligibility facts that matter most
- History: Fannie Mae recommends a minimum two-year history of bonus, commission, overtime or tip income, and allows a shorter period, but no less than 12 months, where positive factors reasonably offset it. The guide does not list which factors qualify.
- Documents: a completed Request for Verification of Employment, Form 1005, or your most recent pay stub plus two years of W-2s, and a verbal verification of employment. For tips your employer does not report, two years of personal returns with IRS Form 4137 may stand in for a W-2.
- Stable or increasing pay: average year-to-date earnings with the previous year’s over the months those documents cover, at least 12.
- Decreasing pay: the lender must confirm the level has stabilized after the decline, and if it cannot, the income is not eligible. Where it has, the calculation is year-to-date income over the months since.
- Bonuses paid once a year are converted to a monthly figure for the trend analysis.
- Continuance: income has to be one the lender can reasonably expect to continue, which is the rule behind the raise example below. These are Fannie Mae rules for loans sold to Fannie Mae, and other programs set their own.
When another route may fit better
- You have under 12 months of variable pay, so the honest answer is base pay only for now, or wait.
- Your pay is falling and has not levelled off, which makes it ineligible until the stubs show a floor.
- The money arrives off the books, and cash that reaches no pay stub, W-2, or return cannot be counted.
- You are self-employed rather than paid by an employer, which is a different rulebook with its own page here.
A worked example: one person, three ways the pay could have gone
One person: base pay of $6,000 a month and a variable component on top, applying in early autumn with 8 months of pay stubs and last year’s W-2. Only the shape of the variable pay changes below.
| Item | Flat | Rising | Falling |
|---|---|---|---|
| Base pay counted each month, assumed identical | $6,000 | $6,000 | $6,000 |
| Variable pay last year, from the W-2 | $24,000 | $18,000 | $30,000 |
| Variable pay this year, from 8 months of pay stubs | $16,000 | $18,000 | $12,000 |
| What this year feels like, monthly | $2,000 | $2,250 | $1,500 |
| Months the calculation covers | 20 months | 20 months | 8 months since it levelled off |
| Variable pay the lender counts each month | $2,000 | $1,800 | $1,500 |
| Total monthly income counted | $8,000 | $7,800 | $7,500 |
| If the lender cannot see a floor | Not applicable | Not applicable | $6,000, base pay only |
What the falling column is really saying
The lender has to confirm the level has stabilized. If it can, the calculation is this year’s earnings over the months since, here $12,000 over 8 months, or $1,500 a month. If it cannot, the file works from $6,000 of base pay alone.
The raise that lowers the number
Now hand that person good news: a promotion lifting base pay by $800 a month that ends the bonus.
| Item | Before the raise | After the raise |
|---|---|---|
| Base pay counted each month | $6,000 | $6,800 |
| Variable pay counted, on the flat history | $2,000 | $0, the bonus has ended |
| Total monthly income counted | $8,000 | $6,800 |
| Change in what the file can use | -$1,200 a month |
Base pay went up $800 a month and the income the file can use went down $1,200 a month. A bonus that no longer exists cannot be expected to continue, and the higher base replaces only part of it. Over a year or two the new base is better pay. In the month you are buying, it shrinks the file.
What this example accomplishes
The same person with the same documents produces $8,000, $7,800, $7,500, or $6,000 of countable monthly income depending only on the shape of the variable pay. It also puts a number on the lag: the rising column earns $2,250 a month and the file counts $1,800.
Assumptions in this example
- The $6,000 of base pay is held identical across the three columns so only the variable pay moves.
- The 8 months of year-to-date earnings and the prior-year W-2 totals are assumed, and a real file lands on whatever months the pay stub covers.
- In the falling column the decline is assumed at the turn of the year with 8 steady months since, and the lender is assumed to accept it has stabilized.
- The raise example assumes base pay rises to $6,800 a month, the bonus ends outright, and the file is taken after the change.
- Taxes, insurance, and your monthly debts appear in no table here, and a lender counts all of them.
- The rules quoted are Fannie Mae’s, read from the Selling Guide on September 12, 2026, and other agencies set their own.
Should I consider a different option instead?
If the variable pay will not carry the file today, these are the routes Zach weighs with your numbers.
- Wait until the history is there
- At ten months of commission the calendar is the cheapest fix, because two more pay stubs can move the file from not eligible to averaged. Falling pay that has levelled off works the same way.
- Qualify on base pay alone and buy less house
- It closes now and it is not fragile, and it leaves the variable pay paying down the loan rather than carrying the approval.
- Add a co-borrower with steady documented income
- A second income changes the comparison and does not repair a missing history on your own pay.
- Time the purchase around a pay change rather than into it
- If a promotion is about to end your bonus, Zach would rather see the offer letter before you sign.
Questions people ask
Does overtime count the same way as a bonus?
Under the Fannie Mae topic, yes. Bonus, commission, overtime and tip income share the same documents, history test, and averaging. One difference: a bonus often arrives once a year, so it is converted into a monthly figure first, and Fannie Mae’s own example is an annual bonus divided by 12.
I changed employers but I do the same job. Does my history reset?
The Fannie Mae topic sets a history requirement and lists the documents, which include two years of W-2s. It does not say, in the section read on September 12, 2026, whether a change of employer inside the same line of work preserves the history of the variable pay. That is NOT VERIFIED here.
In practice, bring it up early. Two W-2s covering the same kind of pay at two employers is a better starting point than a new job with a new pay structure.
Do tips count?
They sit in the same Fannie Mae topic, so they are counted the same way.
The documents are where tips differ. Where tip income is not reported by your employer, the guide allows two years of personal tax returns with IRS Form 4137 instead of a W-2. Cash that never reached a return is not income a lender can use.
This year is way up on last year. Does the good year count?
It counts, and it gets averaged rather than used on its own. Where income is stable or increasing, the calculation takes your year-to-date earnings with the previous year’s and divides by the months those documents cover, with a minimum of 12.
In the example here, that is a gap of $450 a month with nothing wrong anywhere, and the average improves every month the strong year continues.
Will asking about this affect my credit score?
A conversation does not touch your credit, because averaging your variable pay is arithmetic rather than an application.
If a home equity line turns out to be part of your picture, that check is soft. Check your HELOC options without impacting your credit score. Review your options, then decide whether to continue. No impact on your credit score for that first look. The initial rates-and-terms check uses a soft credit inquiry. Continuing and submitting a full application uses a hard inquiry that may affect your score. Preliminary options are subject to verification and final approval. A purchase preapproval is a separate step.
How Zach thinks about this one
The first thing I ask for is the shape of it, not the size. Two years of W-2s and the current pay stub tell me the direction, and the direction decides which calculation we are in.
I run the average out loud, because the gap between what you earn and what counts is what causes arguments later. Hear that number in week one rather than from an underwriter in week five.
When pay is falling I get specific about which month it changed and what every month since looked like. What would change the answer: less than twelve months of history, pay still falling, income that never lands on a document, or debts that eat the number.
What will Zach ask me?
None of this needs paperwork to start. Rough numbers over the phone get you most of the way.
- Your base pay, and roughly what share of your total pay is variable.
- What the variable part came to in each of the last two calendar years, and so far this year.
- How long you have been paid this way, including any earlier employer.
- Whether it is going up, steady, or falling, and if it fell, which month it changed.
- Anything about to change, and your monthly debts, because the income number only means something next to them.
Talk it through
Would rather talk it through first?
Call or text Zach directly at (949) 537-1260. This is a direct line to Zach’s cell. You can text anytime, and if he is available he usually replies within minutes. During normal business hours he is happy to take a call whenever it fits, so reach out even with a quick question and you will get an answer quickly.
There is no form on this site. A text or a call is the fastest way to get an answer, and email works too: zachv@westcapitallending.com.
Sources and checked dates
Sources: Fannie Mae Selling Guide B3-3.3-02, Bonus, Commission, Overtime, and Tip Income (checked 2026-09-12) · Fannie Mae Selling Guide B3-3.1-01, General Income Information (checked 2026-09-12) · Confirmed by Zach, September 2026 (checked 2026-09-10) · West Capital Lending HELOC registration page (referral id omitted here) (checked 2026-09-09) · Experience.com profile (checked 2026-09-10).
Show each claim on this page, what it depends on, and the date it was checked (5)
| What we say, and what it depends on | Source | Checked |
|---|---|---|
| Fannie Mae’s Selling Guide topic B3-3.3-02, Bonus, Commission, Overtime, and Tip Income, states four things this page relies on. Documentation: the lender must obtain a completed Request for Verification of Employment (Form 1005), or the most recent paystub and two years’ W-2s, and a verbal verification of employment is required as well; for tip income not reported by the employer, two years’ personal tax returns with IRS Form 4137 may be provided in lieu of a W-2. Income history: "A minimum two-year history is recommended; however, income received for a shorter period, but no less than 12 months, may be considered as acceptable if there are positive factors to reasonably offset the shorter income history." Qualifying income where the trend is stable or increasing: "Calculate an average income amount using year-to-date and previous year’s earnings, divided by the number of months included in the year-to-date paystub and W-2s. The calculation must include a minimum of 12 months’ income." Qualifying income where the trend is decreasing: "The lender must confirm the current income level has stabilized after the decline; otherwise, the income is not eligible for qualifying. To calculate income, use the year-to-date income divided by months elapsed since the income stabilized." The topic also requires bonus income to be converted to a monthly amount for the trending analysis, giving an annual bonus divided by 12 as its example, and notes that where a documented, non-recurring event outside the borrower’s control temporarily prevented the borrower from earning income, the lender may exclude that period from the calculation. Read in full from the live page on 2026-09-12. The page is dated (03/04/2026) and lists Announcement SEL-2026-02, March 04, 2026. These are Fannie Mae requirements, which apply to loans sold to Fannie Mae; FHA, VA, USDA and non-agency programs set their own rules and lenders adopt guide updates on their own schedules, so the treatment of an individual file is confirmed with the lender rather than read off this page. Two limits are worth naming. The topic does not define which positive factors are enough to accept a 12-month history, so that is an underwriting judgment rather than a checklist. And the topic does not address whether a change of employer inside the same line of work preserves the history of the variable pay: that is NOT VERIFIED here, and the page says so instead of guessing. | Fannie Mae Selling Guide B3-3.3-02, Bonus, Commission, Overtime, and Tip Income | 2026-09-12 |
| Fannie Mae’s Selling Guide topic B3-3.1-01, General Income Information, states that borrowers must be qualified with income the lender can reasonably expect to continue for the foreseeable future, and that the lender must evaluate the likelihood of continuance based on the nature of the income and the supporting documentation. It also states that if the lender is notified the borrower is transitioning to a lower pay structure, for example due to pending retirement or a new job, the lender must use the lower income amount in qualifying and must determine that the lower amount is stable and predictable. Read in full from the live page on 2026-09-12. The page is dated (03/04/2026) and lists Announcement SEL-2026-02, March 04, 2026. This is the rule behind the second table on the page, which shows a raise that ends a bonus program. The guide does not use the phrase "moving bonus into base" and does not work that example; the arithmetic on the page is an illustration built from the continuance requirement, not a worked case published by Fannie Mae. How a specific pay change is treated is confirmed with the lender. | Fannie Mae Selling Guide B3-3.1-01, General Income Information | 2026-09-12 |
| Rates as low as prime may be available for qualifying borrowers in eligible programs. Rate and costs depend on credit, combined loan-to-value, selected loan and program terms, and applicable fees. Prime is a benchmark, not an APR, and not every borrower qualifies for it. The assumed rates in the examples on this site are calculation inputs, never an advertised rate. Exact program terms come from the lender at the time of your check. | Confirmed by Zach, September 2026 | 2026-09-10 |
| On the West Capital Lending HELOC registration page, checking qualifying rates and terms uses a soft credit pull that does not affect the credit score; continuing and submitting an application requests a full credit report, which is a hard pull that may affect credit. From the registration page’s own footnotes, read on September 9, 2026. The first screen asks for the property address, how the home is owned, and whether you live in it; what later screens ask was not inspected. | West Capital Lending HELOC registration page (referral id omitted here) | 2026-09-09 |
| The Experience.com profile for “Zach vonD,” West Capital Lending, displayed a 5.0 overall rating and 63 reviews, with 10 entries visible, when fetched live on September 10, 2026 (UTC). An earlier cached snapshot retrieved September 9, 2026 showed 52 reviews and was marked as crawled about three months before. Read on the date shown, not a live feed. These are Experience.com reviews, not Google reviews, and a general service review does not prove a result for your situation or point to a particular lender. | Experience.com profile | 2026-09-10 |
Written for and accountable to: Zach von der Linden, Mortgage broker and Branch Manager, West Capital Lending.
Last substantive review by Zach: 2026-09-11.
Verify him: NMLS Consumer Access, ID 1652805 · 63 reviews on Experience.com.
Sources for product claims are listed on this page, with the date each was checked.