Mortgage 202 - Bonus and Commission Income and Recent Job Changes

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Qualifying for a mortgage when your income is largely comprised of bonuses and commissions can be tricky, as lenders require a two-year history of receiving such income. In the case of a recent job change, you may face some challenges in proving your income and stability to the lender.

If you have changed jobs within the same industry and have a similar or higher level of compensation, you may still be able to use your bonus and commission income for mortgage qualifying. However, you will need to provide documentation that shows:

  • a.) You have received bonus and commission income for at least two years with your previous employer.

  • b.) You have a written offer or contract from your new employer that outlines your bonus and commission structure.

  • c.) You have received at least one bonus or commission payment from your new employer.

Various loan programs treat this issue differently, so care should be taken to understand the requirements of the loan type you are pursuing given your specific situation1,2. Additionally, certain loan programs require less than two years of income documentation, which may prove pivotal for qualifying given this scenario.

If you have changed jobs to a different industry or have a lower level of compensation, you may not be able to use your bonus and commission income for mortgage qualifying. In this case, you may need to rely on your base salary only or other sources of income, such as savings, investments, or rental income.

The best way to find out if you can qualify for a mortgage with bonus and commission income is to consult with a lender that fully understands and is competent in self-employed or variable income borrowers. We can help you understand the requirements and guidelines for different loan programs and options. We can also help you specify the necessary documentation and verification for your income.

Remembering that lenders are most interested in a two-year history of receiving income, and the likelihood of that income continuing for at least three years, providing them with documentation to support that level of income becomes key.

Footnotes and Estimated Posting Dates:

1. See Conventional Loans: What is Fannie Mae and Freddie Mac? (6/10/24)

2. See Jumbo Loans and the Differences between Conventional Loans. (6/17/24)

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* Specific loan program availability and requirements may vary. Please get in touch with your mortgage advisor for more information.