The short answer
Commission can boost your borrowing power if it’s consistent. How lenders use 6 months year-to-date or 12 months of history, and timing tips.
Banks count commission if it’s consistent. The usual test is 6 months of year-to-date commission on your payslip, which the lender can annualise. If you don’t have 6 months this year, many lenders will look at your last 12 months of commission instead.
The two ways lenders look at commission
Six months year-to-date. With 6 months of commission showing on your payslip, the lender can annualise it.
The last 12 months. Other lenders take your total income for the past 12 months, subtract your base salary, and use what’s left as commission.
Which method suits you depends on the lender and on when in the year you apply.
Why timing in the year matters
Commission is often lumpy. In many sales roles it’s heavier at the start of the year than in the middle or at the end. If you apply just after a quiet stretch, annualising your year-to-date figure can understate what you really earn. A lender that looks at a full 12 months may give a fairer number.
Your industry matters too
Lenders want to understand how your sales and incentives work. Commission tied to a steady pipeline is easier to rely on than one-off bonuses. A broker can position your income with a lender that understands your industry.
Worked example
Say your base salary is $90,000 and your payslip shows $15,000 of commission over the first six months of the financial year. A lender annualising that would count about $30,000. If those six months included your quietest period, a lender using the last 12 months might count more.
Before you apply
Gather payslips showing year-to-date commission.
Have your last two income statements or tax returns ready.
Ask your employer for a letter explaining how your commission is paid.
Talk to your broker about the best time of year to apply.
FAQs
How long do I need to have earned commission?
Usually at least 6 months year-to-date, or 12 months of history.
Will the bank count all of my commission?
Not always. Some lenders count only part of it, so results differ.
Is commission treated like a bonus?
Not exactly. Lenders look at how regular it is; see our post on bonus income.
Related: How Do Banks Assess Bonus Income for a Home Loan? · Borrowing Power Calculator · Home loans
General information only. This article does not take into account your objectives, financial situation or needs, so consider whether it is appropriate for you and seek personal advice before acting. Elephant Financial Pty Ltd trading as Elephant Advisory is an authorised credit representative (ACR 487962) of Yellow Brick Road Aggregation Pty Ltd (formerly Vow Financial Pty Ltd) (ABN 66 138 789 161), Australian Credit Licence 390261.
Gav is the person you want in your corner when it comes to property finance. After years in banking and motor trade finance, he joined Elephant early and never looked back. He's passionate about combining property and finance to help clients achieve their goals through tailored financial structuring, and he's very serious about snacks at meetings.
