Home Loans with Bonus Income
Yes, bonus income can be included in a home loan assessment, but Australian lenders usually shade or average it based on your employment history and consistency.
Can bonus income be included?
Yes, Australian lenders can include bonus income when assessing your borrowing capacity for a home loan. However, because variable components are not guaranteed, banks typically require a demonstrated history of receiving them. Most mainstream lenders prefer to see at least 12 to 24 months of consistent bonus payments from the same employer before counting it towards your serviceability calculations.
To manage risk, lenders rarely accept 100% of your bonus income. Instead, they apply a discount known as 'shading', often accepting between 50% and 80% of the bonus amount. If your bonus fluctuates year-on-year, lenders will generally take a two-year average or base their assessment on the lower figure to ensure you can comfortably service the loan.
To verify bonus income, you will generally need to provide recent pay slips showing year-to-date figures, ATO Income Statements, and tax returns covering the relevant period. Some specialist lenders offer more flexibility for employees in industries where bonuses form a standard part of total remuneration, such as corporate finance or sales.
Because policy rules around variable income differ significantly across the Australian market, choosing the right lender is crucial. A Lonix broker can compare lenders, identify those with the most favourable bonus shading policies for your situation, and properly structure your loan application to maximise your borrowing capacity.
Related questions
- How long do I need to receive a bonus before a lender accepts it?
- Most traditional Australian lenders require a 12 to 24-month history of receiving bonuses with the same employer. However, some specialist lenders may consider a shorter period if you have stayed in the same industry.
- What does income shading mean for home loan applications?
- Shading is when a lender reduces the recognized value of variable income—such as bonuses or overtime—when calculating serviceability. For instance, a bank might only count 80% of your annual bonus towards your borrowing capacity.
- Do lenders treat commission and overtime the same as bonuses?
- Yes, commission, overtime, and bonuses are all classified as variable income. Lenders assess them similarly, typically requiring proof of consistency and applying shading percentages before adding them to your base salary.
- What documents are required to prove bonus income?
- You will typically need to provide your most recent pay slips showing year-to-date earnings, official ATO Income Statements, and personal tax returns for the past two financial years.