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Straight Answers · Bonus income
Will the bank count my bonus income?
Bayley Clarke · Mortgage broker on the road · Lender policy checked 19 August 2026 · 6 min read
The short answer
Yes, they absolutely will. We just have to demonstrate it’s somewhat consistent. If you get an annual bonus from your employer, you’re going to be able to use it.
Most lenders then shade it by 20%, so a $20,000 bonus counts as $16,000. That part is reasonably well known. What isn’t is the bigger lever sitting underneath it: whether a lender averages your last two bonuses or just uses your most recent one.
The 60 second version. Everything below is the detail underneath it.
The two year rule only ever works one way
Everyone fixates on the shading. The bigger question is which bonus figure the lender starts from, and here the detail matters.
A lot of lenders look back two years. What they do with those two numbers depends on which direction you’re heading:
If your most recent bonus is higher than the year before, they average the two. So you don’t get full credit for the increase. If your most recent bonus is lower, they don’t average at all. They just use the lower figure.
Read those two sentences together and you’ll spot the pattern. The rule is asymmetric, and it resolves in the bank’s favour every single time. Trending up, you get averaged down. Trending down, you get the low number with no cushion from the good year. There is no version of this where the average helps you.
Which is why the other group of lenders matters so much: plenty will simply use your most recent bonus on its own, whichever way it’s moving.
| Two years of bonuses | Two year lender uses | Latest-only lender uses |
|---|---|---|
| Trending up: $12,000 then $30,000 | $21,000 (the average) | $30,000 |
| After the 20% shade | $16,800 | $24,000 |
| Trending down: $30,000 then $12,000 | $12,000 (the lower, not the average) | $12,000 |
| After the 20% shade | $9,600 | $9,600 |
Illustrative numbers, not a quote. But the conclusion falls straight out of it. If your bonus is growing, a latest-only lender is worth $7,200 of assessed income to you on these figures. If your bonus has fallen, you land in the same place either way. The two year approach can cost you and can never gain you anything.
So the direction your bonus is heading decides which half of the panel you should be looking at. That’s a five minute conversation before an application, and an expensive discovery after one.
The 20% shade, and who doesn’t apply it
The reasoning behind shading is the same everywhere. Bonuses are inherently unpredictable and they do vary quite a bit, so the bank takes 80% of what you receive and works with that.
| How a $20,000 bonus gets treated | Counted as | Who does this |
|---|---|---|
| No shading at all | $20,000 | A handful of non-bank lenders, generally wanting two years of history |
| Standard 20% shade | $16,000 | The large majority of the panel, including every major |
| Half, on one year of evidence | $10,000 | One lender, rising to 80% once you have two years |
One more worth knowing: at least one lender treats a guaranteed bonus at 100% while shading a discretionary one to 80%. If your bonus is contractual rather than at your manager’s discretion, say so early, because it changes the category you land in.
Paid monthly? Then it isn’t a bonus any more
Bonuses can be paid annually, every six months, or quarterly, and lenders will assess all of those under their bonus income policy.
Once the payments become monthly, most lenders stop calling it a bonus and reclassify it as commission, which is looked at a little differently again. One lender draws the line at anything more frequent than quarterly. Another says monthly equals commission outright.
Reclassification isn’t automatically bad, it just moves you into a different set of history requirements. What it does mean is that “my bonus” and “my monthly incentive” are two different conversations, and describing yours accurately at the start saves a wasted application.
Four things that catch people out
- The two year test isn’t always about your bonus. At one major, the two year requirement is employment tenure with the same employer, and a single payslip showing a bonus within the last twelve months satisfies the bonus side. If you’ve only recently started earning bonuses, that’s a genuine unlock and almost nobody knows it exists.
- There are caps. One lender caps bonus and overtime combined at twice your base salary. Another refers any file where bonus exceeds half of base to a credit specialist. A big bonus on a modest salary isn’t a free pass.
- Overseas bonuses get cut twice. At least one lender applies an extra 20% reduction on top of the standard shading for bonuses paid from overseas.
- One-off payments aren’t bonuses. Sign-on payments, retention payments and relocation money are generally excluded entirely rather than shaded. If a chunk of last year’s income was a one-off, expect it to be stripped out.
What to bring, and what to ask
You don’t need to hunt down years of paperwork. A couple of recent payslips plus your income statements for the last two financial years covers nearly every lender’s evidence test, and the year to date figure on the payslip does most of the work.
Then the question isn’t “will you count my bonus.” Nearly everyone will. It’s “my bonus went up last year, do you average my two years or use the most recent one.” Those two answers move the number more than anything else on the application.
Lender policies described above were checked in August 2026 and change regularly. Individual lenders aren’t named here on purpose: policy moves, and the right lender depends entirely on your situation rather than on a list in an article.
Want to know which lenders use your latest bonus?
Send me a couple of recent payslips and I'll run your number across lenders that average your bonuses and lenders that use the latest one, so you can see the actual gap rather than guess at it. If your bonus has grown, that single setting is often the biggest number in the whole application.
No application, no credit check, nothing on your file. Just the numbers.
Next question
Do shift allowances and penalties count as income?Same underlying question. Different answer, because lenders split allowances from overtime.
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