My pay is commission, bonus, or overtime. What counts toward a mortgage?
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 twelve months, where positive factors reasonably offset it.
Direction decides the rest. Where the income is stable or increasing, the same Fannie Mae rule averages year-to-date earnings with last year’s over the months those documents cover, at least twelve. Where it is decreasing, the lender must confirm the level has stabilized, and if it cannot, the income is not eligible at all.
Zach von der Linden, mortgage broker and Branch Manager, West Capital Lending · NMLS 1652805
Wholesale pricing · California, Utah, Oregon and Arizona
5.0 across 66 reviews on Experience.com (read on 2026-09-24) · Text reaches Zach directly · Last updated 2026-10-16
No credit pull happens from a conversation. Texts go to Zach's cell.
What clients say
Zach was great. Easy process and he took care of the little things that needed to be done to close the loan and offered up sound advice throughout the process.
Zach, was great to work with. He was super responsive and even when there was challenges or delays he would communicate the needs and we worked through them. We very happy with our experiance and the service we received, and we are even more excited with our new home!
Word for word from Experience.com. Read all reviews.
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.
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.
Your rate and costs depend on your credit, combined loan-to-value, lien position, the loan and program you choose, and fees. The options check shows your own terms before any hard credit pull.
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 about the two years Fannie Mae’s rule looks for, 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 twelve months, where positive factors reasonably offset it. The guide does not list which factors qualify.
- Documents, under the same Fannie Mae topic: 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 twelve.
- 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.
- A gap you did not choose: when “a documented, non-recurring event outside the borrower’s control temporarily prevented them from earning income,” Fannie Mae lets the lender leave that period out of the income calculation.
- 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 less than the twelve months Fannie Mae’s rule sets as the floor, 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 fix that costs nothing, 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.
Does my tech-sales commission count if I changed employers?
Often it can, and the rulebook decides how. Fannie Mae's bonus, commission, overtime and tip topic recommends a two-year history and allows no less than twelve months where positive factors reasonably offset the shorter history. It does not say whether commission history from one employer carries to the next, so that reading is the lender's, and I ask before you count on it.
What helps is continuity. Two W-2s and a year-to-date pay stub that show the same kind of pay for the same kind of work at both employers is the file I would rather start with, because Fannie Mae's employment standards treat borrowers who change jobs but still earn consistent and predictable income as having a reliable flow of income.
Accelerators and one-time payouts are read inside the same average. A strong quarter raises the year-to-date figure, but the calculation divides by the months the documents cover, so one payout does not become a permanent monthly figure, and a decline has to have stabilized before the income counts at all. If the new plan pays a different mix of base and commission, tell me before you accept: when the lender is notified of a transition to a lower pay structure, Fannie Mae's guide says it must use the lower amount.
If part of your package is stock, the stock compensation hub routes salary, bonus, commission and RSU questions to the right page, and the RSU income page explains why a sign-on grant is read differently from a recurring award.
Changed employers but still sell the same thing? Text me both employers' dates, your base at each, and what the commission came to in each of the last two years.
Questions people ask
Does overtime count for a mortgage?
It can. Fannie Mae’s guide lets a lender use overtime, bonus, commission and tip income when it is documented, has a history (two years recommended, and no less than twelve months where positive factors offset a shorter one), and can reasonably be expected to continue.
Why won’t my lender count my overtime?
Usually because the history is shorter than the twelve months Fannie Mae sets as the floor, or because the pay is falling and has not levelled off. Another program may read it differently, and Zach checks that before you reapply.
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 twelve.
I changed employers but I do the same job. Does my history reset?
Fannie Mae’s employment standards say borrowers “who change jobs frequently, but who are nevertheless able to earn consistent and predictable income, are considered to have a reliable flow of income for qualifying purposes.” The bonus, commission, overtime and tip topic does not say whether variable-pay history from one employer carries to the next, so ask me and I will confirm how the lender reads it for your file.
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.
My hours change every week. Is that overtime?
Not always. Fannie Mae now calls “a fixed hourly rate with fluctuating hours, or an hourly rate that varies” variable base income. It needs “a minimum 12-month history,” and the lender can average your income or multiply “the average monthly hours (based on at least the most recent 12 months) by the current fixed hourly rate.”
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, Fannie Mae’s calculation takes your year-to-date earnings with the previous year’s and divides by the months those documents cover, with a minimum of twelve.
The worked example on this page puts a figure on that gap, 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.
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, which is Fannie Mae’s floor, 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.
Straight answers to the questions people ask next
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 he answers it himself when he is free. During normal business hours he is happy to take a call whenever it fits, so reach out even with a quick question.
If you would rather leave your name and number, the short form at the end of this page reaches Zach the same way. It is not an application and it does not pull your credit.
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 2026-09-24) · Fannie Mae selling guide, B3-3.3-02, bonus, commission, overtime, and tip income (checked 2026-09-28) · Fannie Mae selling guide, B3-3.2-02, standards for employment-related income (checked 2026-09-28) · Fannie Mae selling guide, B3-3.3-01, base income (checked 2026-09-28) · Fannie Mae Selling Guide, B3-3.3-02, Bonus, Commission, Overtime, and Tip Income (checked 2026-10-16).
Show each claim on this page, what it depends on, and the date it was checked (9)
| 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. | 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. | Fannie Mae Selling Guide B3-3.1-01, General Income Information | 2026-09-12 |
| Your rate and costs depend on your credit, combined loan-to-value, lien position, the loan and program you choose, and fees. The options check shows your own terms before any hard credit pull. | 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. | 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 66 reviews, with 10 entries visible per page, when fetched live on September 24, 2026 (UTC); the page header, pagination and embedded structured data agreed, and the newest review was dated September 23, 2026. Earlier fetches: September 10, 2026 showed 63 reviews; a cached snapshot retrieved September 9, 2026 showed 52 and was marked as crawled about three months before. | Experience.com profile | 2026-09-24 |
| Fannie Mae’s bonus, commission, overtime and tip income section, and its base income section, each say: “When a documented, non-recurring event outside the borrower’s control temporarily prevented them from earning income, the lender may exclude that period from the income calculation.” | Fannie Mae selling guide, B3-3.3-02, bonus, commission, overtime, and tip income | 2026-09-28 |
| Fannie Mae’s standards for employment-related income say: “Borrowers with employment gaps during the most recent 12 months may appear to have unstable employment. Lenders must carefully analyze the borrower’s current employment to ensure that it is likely to continue.” Under Job Changes, borrowers “who change jobs frequently, but who are nevertheless able to earn consistent and predictable income, are considered to have a reliable flow of income for qualifying purposes.” | Fannie Mae selling guide, B3-3.2-02, standards for employment-related income | 2026-09-28 |
| Fannie Mae’s base income section says: “Variable base income refers to a fixed hourly rate with fluctuating hours, or an hourly rate that varies.” It states: “A minimum 12-month history of receiving variable income is required.” Its alternative calculation, “Average Hours,” reads: “The lender must multiply the average monthly hours (based on at least the most recent 12 months) by the current fixed hourly rate.” | Fannie Mae selling guide, B3-3.3-01, base income | 2026-09-28 |
| Fannie Mae Selling Guide B3-3.3-02, Bonus, Commission, Overtime, and Tip Income (03/04/2026): a full-text search of the topic on 2026-10-16 for "signing", "sign-on", "sign on" and "one-time" found no provision on signing or sign-on bonuses paid in cash. The topic's income history rule reads: "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." For bonus income, "the lender must calculate the monthly amount accurately for use in the trending analysis," and the guide's example annualizes an annual bonus by dividing it by twelve. The topic does not say whether variable-pay history from one employer carries to the next. | Fannie Mae Selling Guide, B3-3.3-02, Bonus, Commission, Overtime, and Tip Income | 2026-10-16 |
Written for and accountable to: Zach von der Linden, Mortgage broker and Branch Manager, West Capital Lending.
Last updated 2026-10-16.
Verify him: NMLS Consumer Access, ID 1652805 · 66 reviews on Experience.com.
Sources for product claims are listed on this page, with the date each was checked.
Let's talk through your situation.
Tell me what you're buying and where you are in the process. I'll help you understand what needs to be reviewed before you move forward.
No credit pull happens from a conversation. Texts go to Zach's cell.