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“How is bonus income assessed for a home loan” is the question behind most surprised borrowers. A large bonus rarely translates into the borrowing capacity people expect, because lenders shade it rather than counting it in full.
How heavily they shade it, and whether they count it at all, varies enough between lenders that it often decides which lender the application should go to rather than how much you can borrow.
Start with why the shading exists. A lender is lending over decades against income it expects to continue. Base salary is contractual. A bonus is usually discretionary, variable, and dependent on a result that may not repeat.
So most lenders take a proportion rather than the whole figure. Commonly somewhere between half and all of it, with the proportion set by lender policy rather than by anything you can influence.
They also tend to use the lower of your recent bonuses rather than the most recent or the average, which catches people whose last year was their best.
None of this is a judgement about your job. It is a view about how much of that income will still be there in five years. See what lenders count and what they shade.
Shading is the second question. The first is whether the bonus counts at all, and that turns on history. In practice the answer to “how is bonus income assessed for a home loan” depends first on the table below, before any proportion is applied.
| Your situation | How it usually reads | What strengthens it |
|---|---|---|
| Two or more years of consistent bonuses | Counted, at the lender’s proportion | Payslips and group certificates covering both years |
| One year only | Counted by some lenders, excluded by others | A letter from your employer confirming the arrangement is ongoing |
| First bonus not yet paid | Generally not counted | Nothing yet. The base salary carries the application |
| Bonus falling year on year | Usually assessed on the lower figure | An explanation of the cause, in writing |
| New employer, same industry and role | Varies widely, and this is where lender choice matters most | The contract stating the bonus structure, plus prior history |
Note the bottom row. Changing employers resets the history for some lenders and not for others, which can change the assessed figure substantially on the same facts.
Commission is treated as its own category rather than as a bonus, so “how is bonus income assessed for a home loan” has a different answer where the variable component is commission on sales.
Where commission makes up most of your pay, a number of lenders will assess it more like self-employed income, wanting a longer history and averaging across it.
Where it is a smaller top-up on a solid base, it is often treated much like a bonus. The dividing line sits in lender policy and is not published.
Retail, real estate and recruitment roles are where this comes up most, and where the spread between lenders is widest.
Equity in your remuneration is the hardest part of “how is bonus income assessed for a home loan”. Restricted stock, options and performance rights are counted by a minority of lenders and ignored by most, and vesting schedules complicate it further.
Where a lender does count it, expect a conservative proportion and a requirement that the vesting history is already established rather than promised.
Allowances sit more simply within “how is bonus income assessed for a home loan”, though they still vary. Car, travel, on-call, shift and living away allowances are each treated separately, and some are counted in full while others are excluded entirely.
If a large share of your package sits outside base salary, that fact alone should shape the lender shortlist. See professional lending.
The practical effect of “how is bonus income assessed for a home loan” is a gap between the income you think you have and the income the lender uses.
Two things then compound it. A serviceability buffer is applied on top of the actual rate, which compresses capacity most for the people borrowing the largest amounts.
And credit card and overdraft limits are assessed at their limit rather than their balance, so facilities you never draw on still reduce what you can borrow.
Of those two, the limits are the one you can change quickly. Reducing or closing a facility you do not use lifts the assessed figure, though whether that suits your wider position is your call to make.
The rest is a matter of lender selection. Where a large share of your pay is variable, the lender whose policy best fits that mix can change the assessed figure materially. See what you can actually borrow and the credit card calculator.
Presentation does real work on “how is bonus income assessed for a home loan”, because an assessor can only count what the documents support.
Most of “how is bonus income assessed for a home loan” comes down to what you hand over. Supply payslips that show base and bonus separately rather than a single combined figure, plus a year-to-date total. Where the bonus is annual, include the payslip from the period it was paid.
Add two years of group certificates or income statements, and an employment letter confirming the bonus structure and that it is ongoing. That letter is the single most useful document in a one-year history.
And disclose any credit card and overdraft limits, because those are assessed at their limit rather than their balance and will reduce capacity regardless of how well the bonus is counted.
Call +61 447 959 546 and we will go through how each lender on the panel treats your pay mix before anything is lodged.
Most lenders count a proportion of it rather than the whole figure, commonly somewhere between half and all, with the proportion set by that lender’s policy.
Many also use the lower of your recent bonuses rather than the latest or the average. The proportion varies enough between lenders that it often decides where the application should go.
It is counted by some lenders and excluded by others, which is the widest spread in this whole area. Two or more years of consistent bonuses are generally counted at the lender’s proportion.
One year is counted by some lenders and excluded by others, and a first bonus not yet paid is generally not counted at all. An employer letter confirming the arrangement is ongoing helps most in the one-year case.
Most lenders want two years, evidenced by payslips and income statements covering both, and many then use the lower of the two figures rather than the average.
Some lenders will work with one year where the structure is documented and the employer confirms it continues. Because the requirement is not uniform, a borrower with one year of history has a materially different outcome depending on which lender assesses the file.
No. Commission is its own category. Where it makes up most of your pay, a number of lenders assess it closer to self-employed income, wanting a longer history and averaging across it.
Where it is a smaller top-up on a solid base, it is often treated much like a bonus. The dividing line sits in lender policy rather than anywhere public.
With most lenders, no. A minority will count vested equity conservatively where there is an established vesting history rather than a promise, and unvested entitlements are generally disregarded. If equity is a large part of your package, that single policy difference should shape which lenders the application goes to.
Most lenders will assess on the lower figure rather than the average or the earlier year, so a fall reduces the assessed income even where the two-year average looks healthy.
A documented one-off cause is worth supplying in writing, because an explanation an assessor can see reads as an event, while an unexplained drop reads as a trend.
The minimum serviceability buffer that authorised deposit-taking institutions apply on top of all of this is set by APRA at three per cent.
Individual lenders set their own, often higher, and non-bank lenders are not bound by it. How each income component is counted is set by individual lenders and changes without notice.
Paritosh Wadhwani | Director and Principal Broker, APW Finance
Member of the Finance Brokers Association of Australia (FBAA). Arranging residential, commercial and specialist lending for Sydney clients across a panel of more than 50 lenders.
APW Finance Pty Ltd, 304/20a Lexington Drive, Bella Vista NSW 2153. Email: info@apwfinance.com. Phone: +61 447 959 546.
ACN 620 646 479 | ABN 79 620 646 479
This guide is general information only. It does not take into account your objectives, financial situation or needs, and it is not financial or credit advice. Lending criteria, interest rates, duty thresholds and government schemes change, and every application is subject to lender approval.
Consider whether this information suits your circumstances and seek independent advice before acting. Figures quoted are current at the date below and should be confirmed before you rely on them. Last reviewed: October 2026.
APW Finance Pty Ltd delivers expert lending solutions with personalised service, empowering clients across residential, commercial, and business sectors.