Using bonus income for a home loan
Bonus income may be considered in a home loan application, but lenders can discount it, average it or exclude it depending on its history and their policies. A target bonus in an employment package is different from money already received. Prepare evidence of both base pay and bonuses, then ask how much the lender will accept. Keep your own repayment budget workable when a bonus arrives late or is smaller than expected.
By Ratey · General information for Australian borrowers.
Worked example: an annual bonus does not fill every month
Sam receives $7,000 a month in take-home base pay. Planned household outgoings, including the proposed mortgage, are $7,300 a month. Sam also received a $12,000 after-tax bonus last year. These are illustrative cash-flow figures, not an income assessment.
Without another bonus, the monthly shortfall is $300, or $3,600 over twelve months. If a future bonus arrives after nine months, the first nine months require $2,700 from another source. Averaging last year’s bonus into monthly income would conceal that timing problem.
Sam can now compare a smaller repayment, lower planned spending or a defined cash reserve. Whether a lender accepts any of the bonus is a separate question requiring its assessment and the relevant evidence.
Separate guaranteed pay, targets and actual payments
Write your remuneration in three lines: base salary, bonus target and bonuses actually paid. Note whether a figure includes superannuation and whether it is before or after tax. Mixing these categories can make a household budget look stronger than the cash arriving in the account.
APRA’s mortgage guidance addresses adjustments for variable and uncertain income. That supports treating a bonus separately from regular salary; it does not establish a single accepted percentage for every lender or applicant.
Build a short evidence pack
Start with the lender’s own current document request. For your preparation, collect payslips showing bonus payments, income statements, relevant bank credits and the employment document explaining the arrangement. Label the period each payment relates to, especially if it was paid in a later financial year.
ME’s supporting-document checklist distinguishes annual bonuses and other income types. This illustrates why you should ask for the current evidence rules of the lender receiving your application, rather than assume a single payslip proves a recurring bonus.
Create a timeline if you have changed employer or moved from commission to a salary-and-bonus arrangement. A short explanation of what changed helps the assessor interpret the documents. It should describe actual events, including any one-off payment, without representing an expected award as guaranteed.
Run your household budget before the bonus arrives
Use take-home base pay for a first budget. Include proposed mortgage repayments, ordinary spending, other debts and a monthly allowance for annual bills. Then add a separate scenario for a lower or delayed bonus. You are testing timing as well as the annual total.
A bonus paid in December does not pay a shortfall in July unless you already have accessible funds. For each month with a gap, write down which savings cover it and what remains afterwards. Keep money allocated to upcoming bills separate from an emergency reserve.
If you plan to use a received bonus as an extra repayment or offset deposit, model that action separately. Do not count the same dollars as the house deposit, the ongoing cash buffer and the source of extra repayments.
Ask what happens when the bonus changes
Useful questions are concrete: Which payment periods will you use? What evidence is missing? How is a one-off award treated? Would the assessment change if the latest bonus were excluded? What happens if employment changes before settlement?
Request the accepted income figure as well as the borrowing estimate. If two estimates differ, compare the inputs before assuming one lender is simply more generous. A longer term, different expenses or a different treatment of debt may also explain the result.
Your next-step checklist
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Common questions
Is 100% of my bonus always counted?
No. Treatment depends on the lender and evidence. Avoid using a universal inclusion percentage in a borrowing estimate.
Can an expected bonus be my deposit?
A target payment is not cash available for settlement. Confirm when funds will actually be available and what evidence the lender needs before relying on them.
Should I average bonuses for my budget?
An average can help describe history, but also check actual payment timing. Monthly commitments continue during months when no bonus is paid.
Sources and assumptions
These primary sources support the explanations above. Examples use invented figures to show the calculation or decision; they are not available loan offers. Check your lender’s terms for your circumstances.
Calculations are estimates and do not establish borrowing eligibility. Read the calculation methodology.
Check your regular repayment burden
Compare mortgage repayments with income, then review the limits of this simple ratio.