There is a great deal you could do with your annual bonus, from taking that much-awaited vacation to funding a pending renovation. But can your bonus help you qualify for a home loan?

While assessing your home loan application, lenders take into account several criteria, including your income, assets, expenditure, liabilities and employment history. More than anything else, lenders want proof of steady income, which helps them determine your repayment capacity.

extra income

Providing proof of your income is easy – especially if you are an employee with a fixed salary, your pay slips, bank statements and tax returns are all the documents required for the lenders to assess your income. But what if regular commissions, overtime, performance bonuses or rentals form a part of your regular income? Do the lenders take into account such extra income while deciding how much you can borrow?

In general, a one-time bonus is not going to have any effect on your home loan application. However, if you can show a two-year history of regular bonus income, our expert brokers know of some lenders who will consider bonus income as part of your earnings.

Here’s a peek into how banks assess bonus income of different types:

Overtime – For many service providers such as nurses, paramedics and even contractual employees, overtime payments form a significant amount of their income. However, how banks treat your overtime income varies according to your profession as well as the frequency of overtime. For nurses, paramedics and professionals who have overtime payments stipulated in their employment contract, lenders might consider the full amount of overtime income while determining their borrowing capacity.
In other cases, if you have been receiving regular overtime payments for a couple of years, lenders will take into account at least 50% of your overtime income while assessing your mortgage application.

Bonus and Commissions – In certain jobs, especially those related to sales and marketing, employees regularly receive bonus payments or commissions based on their performance or their company’s overall performance. In such cases, a few lenders will accept bonus payments or commissions as part of your income, if the payments have regularly been received over a period of two years or more. An employer’s letter substantiating future payouts will further strengthen your case.
This also means that lenders will take into account your annual bonus while assessing your home loan application. However, a one-off bonus payment will not be considered. Additionally, for commission-based income, you must be able to provide tax returns or group certificates for a few years, confirming monthly commissions over an extended duration of time.

Note that most lenders do not consider car or travel allowances as part of your income.

For investment property owners, most lenders take into account up to 80% of your rental income while calculating your borrowing capacity, given the fluctuating rentals as well as the cost of maintaining the property. Speak to a mortgage broker to know more.

Who can qualify for a bonus income home loan?

Salaried employees who receive regular amounts of bonus income consistently in the form of overtime, commissions or performance bonus, can apply for a bonus income home loan wherein the lender will consider their bonus income while deciding on the approved loan amount.

To qualify, apart from the regular documentation required to apply for a home loan, you must provide the following supporting documents:

  • Payslips / Bank Statements
  • Tax returns or group certificates for preferably two years (as proof of regular bonus income)
  • Employer’s letter confirming bonus payouts in the future

While any bonus income is always welcome in your bank account, when it comes to applying for a home loan, payments that are regularly received are favoured over irregular or one-off payments that you’d rather put down towards your home loan deposit. Additionally, not all lenders will take into account your bonus payments while calculating your borrowing capacity. Even between those who do, a few lenders will have more flexible criteria than the others. Mortgage brokers are aware of the lending standards for different lenders and can help you find not only the right lender but also the right home loan for your situation. At HashChing, we have verified mortgage brokers on board who will answer your home loan queries online, absolutely free. Ask an expert, now!

We also offer competitive home loan deals from over 60 lenders across Australia that you can compare on our Home Loan Deals page.

By Vidhu Bajaj
HashChing Content Writer


HashChing is helping Australians by providing access to the pre-negotiated home loan deals. Obligation free consultation with one of our partner brokers might save you time, hassle and money.

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