Can bonus income count towards a home loan?

If an online calculator used your full bonus and the bank used $0, do not assume the bonus is unusable. The lender may be missing the payment history or treating it as a different type of income.

An annual bonus is commonly discretionary and paid once after performance or company results are known. Commission is more often tied to a formula, sales or targets and paid through the year.

The name on the payslip is not always enough. I check how the payment is worked out, how often it is paid and whether it is tied to sales or targets. That tells me whether I should test it as commission or an annual bonus.

A guaranteed or contractual bonus is not automatically base salary. It may strengthen the evidence or change how it is classified, but the current percentage and history rule can still apply.

Bonus income can sometimes be used after 1 year, although 2 years is still the more common starting point across these 17 lenders. Where your history does not fit either group, the payment pattern and evidence become more important.

Read our lender reviews: UBank; Bankwest; ING; People First Bank; Westpac; St George; CBA; NAB; ANZ; Pepper Money; Teachers Mutual Bank; Resimac; Suncorp; Macquarie; Firstmac; AMP; ME Bank

Oscar only had 1 year of bonus history, but that did not automatically reduce the income to $0. One lender could consider it once we matched the payment records to the income statement and employer letter.

This example uses the same applicant on a $100k base salary with a $25k eligible bonus. Nothing changes except the amount of bonus included in the assessment.

Counting 100% rather than 50% of the $25k bonus adds $12.5k to assessed annual income. That is an income difference, not an increase in the loan amount.

This illustrates assessed income only. It does not calculate borrowing capacity, which also depends on debts, expenses, dependants, the loan term and the lender’s assessment method.

The old bonus can still show that variable pay is normal for you. It may not satisfy a rule that needs time with the same employer or an actual bonus from the new employer.

I put the old and new bonus plans side by side, then check the first payment from the new job. If the base salary already supports the purchase, you may be able to apply now. If the purchase only works by counting the new bonus in full, I would want stronger evidence before you rely on it.

Our new job guide explains how your time in the role affects the application.

A bonus already sitting in your account can help with the deposit or clear a debt even if a lender will not count it as ongoing income. I check those 2 benefits separately so the same money is not doing 2 jobs in the plan.

Include the bonus in your enquiry even if you are unsure whether it will count. State how and when it is paid, including whether you receive cash, shares or time off instead of cash. For your own budget, ask what repayments you could manage if the next bonus were smaller or arrived later, and what savings you want to retain.

• Unsure whether it is bonus or commission: bonus plan, employment contract and employer letter.

• Payment missing from the payslip: ATO income statement, bank credit and payment advice.

• Only 1 year of payments: every payment date, gross amount and the latest completed income record.

• Bonus amount changed sharply: current and prior amounts beside the employer's explanation.

• New employer: old and new plans plus the first actual payment from the new role.

The broader income and employment guide can help when bonus sits beside overtime, allowances, casual work or a new role.

About this information: Bonus and commission policies can change, and the full application still matters. This page contains general information only and is not a credit assessment or promise of approval.

Hunter Galloway Finance Pty Ltd is Credit Representative 476903, authorised under Australian Credit Licence 389328.

Client examples are based on real situations. Names and identifying details have been changed.