Why Commission, Tip, and Bonus Income Might Not Count for a Mortgage Qualification

So, you’ve been killing it at work—racking up commissions, stacking up tips, or cashing in on hefty bonuses. You’re making more money than ever, and now you’re ready to buy a house. Naturally, you assume that all this extra cash will help you qualify for a bigger mortgage.  Then—bam!—your lender drops the bombshell: “Sorry, but we can’t count that income.”  Wait, WHAT?! You worked hard for that money, and now it doesn’t even count? Welcome to the sometimes-confusing world of mortgage underwriting, where not all income is created equal.  Let’s break down why commission, tip, or bonus income might not be included in your mortgage application—and what you can do about it.

Why Your Extra Income Might Not Count

Lenders are all about stability and predictability—and unfortunately, commission, tip, and bonus income can be… well, unpredictable.

1. The Two-Year Rule

Most mortgage lenders require at least two years of receiving commission, tip, or bonus income before they’ll consider it part of your qualifying income. Why? Because they need to see a consistent history of earning that money.

Think about it: if you just started making big commissions a few months ago, how does the lender know it’ll continue? Maybe it’s a great month, or maybe your boss finally started appreciating you. Either way, lenders want a track record before they start counting those extra dollars.

2. No Stability, No Loan

Lenders get nervous about income that fluctuates too much. If your commission, tips, or bonuses are all over the place—high one month, low the next—it’s hard for them to estimate what you’ll consistently earn in the future.

3. Show Me the Paperwork!

Let’s be honest: reporting tip income accurately is not every worker’s strong suit. If your tips are mostly in cash and don’t make it onto your pay stubs or tax returns, lenders won’t be able to verify that income. No paper trail = no dice.

Exceptions: When You Might Get Lucky

Before you start flipping tables, there are some exceptions to the two-year rule:

✅ If you’ve been earning commission, tip, or bonus income for at least one year AND were previously self-employed in the same field.
Example: You ran your own business as a real estate agent for years, then switched to working for a brokerage on commission. Lenders may consider your previous self-employment history when evaluating your income.

✅ If your commission or bonuses are guaranteed by your employer.
Some companies provide a minimum guaranteed commission or bonus structure. If your employer can verify that in writing, a lender may be more flexible.

✅ If your income is steadily increasing.
If your commission, tip, or bonus income is going up consistently—and your employer can confirm it’s expected to continue—some lenders may allow an exception. But if it’s all over the place? Not so much.

Best Practices: How to Prepare If You Earn Commission, Tip, or Bonus Income

If you’re receiving commission, tip, or bonus income and planning to buy a home, follow these steps to set yourself up for success:

✔️ Be Patient – If you’re new to earning commissions, tips, or bonuses, consider waiting until you have two full years of documented income before applying for a mortgage.

✔️ Report All Your Income – If you’re earning tips, make sure you’re reporting them on your tax returns. Lenders can’t use income they can’t see.

✔️ Keep Your Tax Returns and Pay Stubs Organized – Lenders will want W-2s, tax returns, and pay stubs to verify your income history. If you’re self-employed, keep detailed records.

✔️ Talk to a Mortgage Professional Early – Don’t wait until you’re ready to make an offer on a house to find out if your income qualifies. A mortgage professional can review your situation and guide you on the best path forward.

✔️ Consider a Co-Borrower – If your commission, tip, or bonus income won’t count but your partner or spouse has a stable income, applying for a mortgage together might be a good option.

✔️ Save, Save, Save! – If your fluctuating income isn’t enough to qualify on its own, having a solid down payment and reserves can help strengthen your application.

Final Thoughts: Plan Ahead & Avoid Surprises

The bottom line? Commission, tip, and bonus income can absolutely help you qualify for a mortgage—but only if you have a history that lenders trust. If you’re new to these income types, be proactive, document everything, and plan ahead.

🏡 Want to know if your income will qualify? Let’s chat! I’ll help you figure out what you need to do to get mortgage-ready and avoid last-minute surprises. Click HERE for a free, and let’s get you on the path to homeownership!