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You can get a mortgage on commission income. Conventional lenders following Fannie Mae and Freddie Mac guidelines usually want a two-year commission history (12 months can work), average your commission over that period, and scrutinize any decline. Your base salary counts in full.
Commission gets a harder look from underwriters than salary does, and that surprises a lot of reps. Suppose you close a $300,000 year: a loan officer may still tell you that you "only" qualify on something closer to $220,000. Nothing is wrong with your income. Lenders are paid to predict whether your income will keep showing up for years, and with variable pay the only evidence they have is your history.
I carried a quota in tech sales before I became a financial planner, and I remember how a mortgage pre-approval felt like a verdict on whether my commission was "real." Once you understand the handful of rules underwriters actually apply, the process gets predictable, and you can time your application so your best numbers are the ones on paper.
Thinking about buying in the next 12 months?
A 30-minute call will show you what payment fits your real income before a lender tells you what you can borrow.
Let's TalkDoes Commission Count as Income When Buying a House?
Yes. Commission counts as qualifying income as long as the lender can document it and it's reasonably likely to continue. Fannie Mae's Selling Guide groups commission with bonus, overtime and tip income as variable pay, and the lender has to show it's stable and predictable before counting it.
Your base salary is treated differently. A lender can count it in full off your current pay stub and a verbal verification of employment, even if you started the job recently. Commission is the piece that has to earn its way in through history, which is why reps with a high base and a modest variable component often have an easier time than reps with a low base and huge commission.
Can You Get a Mortgage With a Commission-Based Job If You're New to It?
Often, yes, though the commission itself may not count yet. Fannie Mae recommends a minimum two-year history of commission income and allows income received for at least 12 months when there are positive factors that reasonably offset the shorter history, such as strong reserves, a low debt load, or staying in the same line of work.
Under 12 months, most conventional lenders will qualify you on base salary alone. FHA, VA and jumbo loans each run their own rules on top of this, and individual lenders can add stricter "overlays" to any of them. A jumbo lender, for example, may insist on the full two years. Ask any loan officer you talk to which guideline they're underwriting to, because the answer changes how your commission gets treated.
What Documents Do Lenders Need for Commission Income?
Plan on your most recent pay stub and your last two years of W-2s at minimum. Fannie Mae accepts either that combination or a written Verification of Employment (Form 1005) completed by your employer, and it also requires a verbal verification of employment before closing.
A few things make this smoother for sales reps:
- Your pay stub should show year-to-date commission as its own line. If your payroll lumps base and commission together, ask HR for a written VOE that breaks them out.
- Keep copies of your Form W-2 for every employer in the past two years, including one you left mid-year.
- Some lenders pull IRS tax transcripts or ask for your full returns. You can download your own through IRS Get Transcript and check that they match what you're telling the lender.
- Have a copy of your current comp plan ready. It helps if your OTE or quota changed.
How Do Lenders Calculate Commission Income for a Mortgage?
They average it. Fannie Mae has lenders combine your year-to-date earnings with the prior year (or two) and divide by the number of months covered, using at least 12 months. The result becomes your monthly qualifying commission, which gets added to your base salary.
Take a hypothetical rep with a $90,000 base who earned $60,000 in commission two years ago and $84,000 last year. To keep the math simple, assume the lender averages those two full years:
| Step | Math | Result |
|---|---|---|
| Two-year commission total | $60,000 + $84,000 | $144,000 |
| Average annual commission | $144,000 ÷ 2 | $72,000 |
| Qualifying annual income | $90,000 + $72,000 | $162,000 |
| Qualifying monthly income | $162,000 ÷ 12 | $13,500 |
This rep made $174,000 last year and qualifies on $162,000. The $12,000 gap is the averaging at work, and it's the reason your best year helps less than you'd expect.
The trend matters as much as the average. Rising commission, like this rep's, is the easy case. If commission falls, Fannie Mae requires the lender to confirm your income has stabilized at the lower level; if it can't, the commission isn't eligible at all. Freddie Mac has lenders qualify you on current earnings when the trend is declining, and FHA uses the lesser of your two-year average and your most recent year. Flip this rep's numbers, $84,000 and then $60,000, and the qualifying commission drops to $60,000 or lower.
If you're coming off a rough year because of a territory change or a bad comp plan, write a short explanation for the loan officer and include your current year-to-date numbers. Underwriters can only credit a recovery they can see on paper.
What Salary Do You Need for a $500,000 Mortgage?
Roughly $105,000 to $125,000 of qualifying income, under the assumptions below. Lenders compare your total monthly debt payments, including the new mortgage, to your gross monthly income. That's your debt-to-income ratio, or DTI. Fannie Mae caps DTI at 36% on manually underwritten loans (up to 45% with compensating factors), and its automated system can approve up to 50%.
For the illustrations here, assume a 30-year fixed rate of 6.5% and $600 a month for property taxes and homeowners insurance. Those are placeholders for the math, and your rate and your county's tax bill will move the answer.
| Loan amount | Monthly payment (P&I + $600) | Income needed at 36% DTI | Income needed at 43% DTI |
|---|---|---|---|
| $400,000 | $3,128 | $104,276 | $87,301 |
| $500,000 | $3,760 | $125,345 | $104,940 |
Those figures assume no other debt. Every car payment or student loan raises the income you need.
Back to the hypothetical rep. At $13,500 of qualifying monthly income and a 36% DTI, total debt can run $4,860 a month. Suppose the rep has a $550 car payment and a $310 student loan. That leaves $4,000 for the house, or $3,400 after taxes and insurance, which supports a loan of about $537,900 at 6.5%. At 43% DTI, the housing budget becomes $4,945 and the loan climbs to about $687,400.
If the lender had used last year's $174,000 instead of the average, the same 36% test would have allowed about $594,900. The averaging cost this rep about $57,000 of buying power.
How Much House Should a Sales Rep Actually Buy?
Less than the approval letter says, in most cases. A lender's job is to measure whether you can make the payment on your averaged income. It says nothing about whether you can keep funding your goals and ride out a bad quarter while making it.
When I build plans for reps, I use base salary plus 50% of variable pay as the planning income. It's conservative on purpose, and every dollar above it goes toward goals. For the hypothetical rep, that's $90,000 plus half of the $72,000 average, or $126,000 a year and $10,500 a month.
Measured against that number, the $4,000 housing payment the lender approved eats 38% of planning income by itself, and 46% once the car and student loan are added. Run the same 36% test against planning income instead, and the housing budget becomes $2,920 a month: $10,500 × 36% = $3,780, minus the $860 in other debt. After taxes and insurance, that supports a loan of about $367,000. The gap between $537,900 and $367,000 is the gap between what the bank will allow and what still works in a down year.
Your number might land somewhere between those two, and that's fine. The point is to pick it on purpose. The walkthrough in how to calculate your commission income floor shows how to find the income you can count on in a bad year.
Your down payment and closing costs should come from money set aside for the house, separate from your emergency fund. I start reps at a 3-month floor of expenses and scale up from there, and owning a home is one of the reasons to scale up, since the water heater doesn't care what quarter it is. More on sizing it in how to build an emergency fund on commission income.
Want your own version of this math?
Bring your last two W-2s to a free call and we'll work out the payment that fits your plan.
Book a callWhen Is the Best Time to Buy a House on Commission Income?
Right after a strong year lands on your W-2, and while you're settled in the same job and comp plan. Timing can move your qualifying income by tens of thousands of dollars, so a few habits are worth building before you apply.
Don't change jobs mid-process. A new employer usually resets the clock on commission, and Fannie Mae tells lenders to use the lower figure if they learn you're moving to a lower pay structure. A rep who takes a new role with a smaller base and a bigger variable component in the middle of underwriting can lose the approval entirely. Close first, then take the call from the recruiter. If you're weighing a bigger career move, what to do financially before you leave sales covers the order of operations.
Keep the commission history clean. Ask payroll to report commission as its own line, keep your comp plans, and hold on to every W-2. Clawbacks, draws against commission, and mid-year plan changes are all explainable, but only if you have the paperwork.
Know when a big year helps. A record year pulls your average up once it's documented on a W-2, which means an application in February or March after a strong prior year often qualifies better than one in November. A strong year-to-date also helps, since the lender folds it into the average. The same math works against you after a down year: waiting until your year-to-date numbers show a recovery can be worth more than applying today.
Get pre-approved with a lender who regularly works with commissioned borrowers, and ask them to show you the income calculation in writing. If their number differs from the one you ran here, you'll know exactly which piece of your history they're discounting.
Frequently Asked Questions
Can I get a mortgage if I have commission income?
Yes. Conventional lenders count commission once you have a documented history, usually two years, though Fannie Mae allows 12 months with offsetting factors. Your base salary counts in full even if your commission history is short.
Is commission counted as income for a mortgage?
It is, once the lender can verify it with pay stubs, W-2s or a written verification of employment and sees that it's stable. Lenders average commission over your history rather than using your best year, and a declining trend can reduce or eliminate the amount they count.
How do lenders calculate commission income for a mortgage?
They add your year-to-date commission to the prior year or two and divide by the number of months covered, using at least 12 months. A rep with $60,000 and then $84,000 in commission would qualify on about $72,000 a year, or $6,000 a month, plus base salary.
What salary do you need for a $500,000 mortgage?
At a 6.5% rate with $600 a month in taxes and insurance and no other debt, you'd need about $125,000 of qualifying income at a 36% debt-to-income ratio, or about $105,000 at 43%. Other debts, a higher rate, or higher property taxes raise that number.
What salary do you need for a $400,000 mortgage?
Using the same assumptions, about $104,000 of qualifying income at a 36% debt-to-income ratio, or about $87,000 at 43%. For commissioned reps, qualifying income means base salary plus your averaged commission, which may be lower than what you earned last year.
Can I get a mortgage right after starting a new commission job?
Usually on your base salary only. Most lenders want at least 12 months of commission history, and many treat commission at a new employer as new income. If your offer includes a guaranteed base, that part can often count right away.
Is there a mortgage commission income calculator?
You can run it yourself: add your commission from the last two years, divide by 24 to get a monthly figure, and add your monthly base salary. Multiply the total by 36% and subtract your other monthly debt payments to estimate the housing payment a lender might allow.
