Home Loans with Overtime Income
Yes, Australian home loan lenders will usually accept overtime income, but they typically shade it (e.g. count 80%) and require a proven history of regular earnings.
Will lenders include overtime income?
Yes, most Australian mortgage lenders will consider overtime income when calculating your borrowing power. However, because overtime is treated as variable income rather than base salary, credit assessors apply specific criteria to evaluate its stability. Lenders want to ensure you can comfortably service the home loan even if your overtime hours fluctuate or reduce in the future.
To accept overtime, lenders usually require evidence of consistent earnings over time. Most credit policies look for at least six to twelve months of continuous overtime with the same employer, verified through your recent PAYG payslips, Year-To-Date (YTD) earnings, and income tax returns. Essential workers, such as nurses, police, and emergency services personnel, often receive more flexible treatment due to the ongoing nature of shift work.
Lenders commonly apply a process called 'shading' to variable earnings. This means they might only count 80% of your calculated overtime income in serviceability tests. Some conservative lenders cap overtime at a maximum percentage of your base salary, while other policy-friendly lenders may accept 100% of your earnings if you meet specific employment tenure criteria.
Because policies on variable income vary significantly across mainstream banks and non-bank lenders, navigating these rules alone can be challenging. A Lonix broker can compare lenders across the market and help structure your loan application to ensure your total income is assessed as favourably as possible.
Related questions
- How much of my overtime income will lenders use?
- Most lenders shade variable income, typically using 80% of your average overtime earnings, though select lenders may accept up to 100% depending on your industry and employment history.
- What documents do I need to prove overtime income?
- You will generally need your two most recent PAYG payslips showing Year-To-Date (YTD) earnings, along with your most recent Notice of Assessment or tax return.
- What if I have only been earning overtime for a few months?
- If you have less than six months of overtime history, major banks may exclude it from serviceability, though specialized lenders might consider it with an employer letter.
- Do nurses and emergency workers get different overtime rules?
- Yes, many Australian lenders recognize essential services overtime as essential income, allowing up to 100% of these earnings to be factored into borrowing power.