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What income counts for a home loan?

Bayley Clarke · Mortgage broker on the road · Last checked 6 September 2026 · 9 min read

The one question behind every income rule

A lender is agreeing to be paid back out of your income for up to thirty years. So it doesn't take your gross income and run with it. It rebuilds your income from scratch, line by line, and asks the same question of every line: how confident are we that this money keeps arriving?

Base salary is contracted, so it generally passes through untouched. Everything else has to earn its place. A bonus is at someone's discretion, so it gets discounted. Casual hours have no guaranteed floor, so the annual figure gets rebuilt conservatively. A payslip signed by your mum isn't independent evidence, so it gets a second check. A salary that started three weeks ago has no track record yet, so the history around it gets weighed instead.

None of these rules is personal, and none of them means no. Every one of them is the same question wearing a different outfit. Once you see that, the whole terrain gets easier to walk.

The three things lenders do to your income

1. They discount it. The polite word is shading. Most lenders take a bonus at 80% of its face value, so a $20,000 bonus counts as $16,000. A handful count the lot, and at least one only counts half of it until you can show two years of history. Shift allowances, penalties and overtime get a haircut too, but not evenly: at several lenders your permanent shift allowances count in full while overtime from the same fortnight gets cut, and whether any of it comes back to 100% depends on whether your occupation sits on that lender's essential services list.

2. They rebuild the annual figure themselves. A salary arrives as an annual number. Variable income doesn't, so the lender constructs one. For casual workers that means multiplying your pay across a set number of weeks, and that number is a policy setting, not a fact: some lenders use 52 weeks, plenty use 48, several use 46. For bonuses it means choosing between averaging your last two years or simply using the most recent one, and if your bonus is growing, that choice moves real money. The most common rule on the panel is the lower of the two-year average or the latest figure, which only ever resolves in the bank's favour. A few lenders use the most recent bonus on its own, and that is where a rising bonus belongs. Commission works the same way: 80% at most lenders, all of it at a few, and one lender caps it at twice your base salary no matter how good your year was.

3. They test whether it's real and durable. This is the verification layer. If you're on probation or recently switched jobs, the lender reads the shape of your work history: time in the role, the gap between jobs, whether your industry experience carries across. At several lenders a signed contract and one payslip is enough to be assessed inside probation. A small number want probation finished before they'll look at you at all. If you're employed by the family business, the payslip alone doesn't settle it, and the lender wants to see the wage landing on your lodged tax return as well.

Every income question I get asked is one of those three moves in action. Which brings us to the part that actually changes outcomes.

Same payslips, different lender, different answer

Here's the bit the calculators can't show you: every lender sets those dials itself. How much to shade, whether to average, how many weeks to annualise over, which occupations get exemptions, how much history is enough. Same rules of thumb, wildly different settings.

The spreads are not small. A casual worker on the same roster can have over $20,000 of difference in assessed annual income between the most generous lender and the least, purely from the weeks used to annualise the pay. Illustrative numbers, not a quote, but no conversation about interest rates moves your borrowing power that far. A nurse with $20,000 of shift penalties keeps all of it at one lender and loses $4,000 a year of assessed income at another, on identical payslips. A growing bonus gets averaged down at some lenders and taken at its latest figure at others.

And the occupation lists that decide so much of this are written separately by every lender. Childcare workers, aged care workers, miners, train drivers, cabin crew and teachers all sit on somebody's essential services list, even though almost none of them would describe themselves that way. You just have to be sent to the lender whose list you're on.

Which is why "what income counts for a home loan" has no single answer. There is only what counts at the lender you walk into. A branch can only ever offer you its own policy, and nobody in that building is going to mention that the lender down the road would have counted the lot.

The employed income questions, one by one

Each of these has its own full answer, with the lender-by-lender detail underneath it. Find your income type and go down a level.

Self-employed: the bank reads a different document

Everything above assumes a payslip. Run your own business and the lender reads your tax returns and financials instead, and the same question gets asked of a different set of numbers. Your accountant spent the year making the profit look small. The bank wants it to look big. That single tension explains most of what goes wrong for self-employed borrowers.

The rule of thumb is two years of returns, but a good chunk of the panel will now assess you on your latest year alone, usually with the loan under 80% of the property's value. The two-year lenders take the lower figure, or the average if the latest year is higher. Then the add-backs: your own wage, depreciation, one-off costs and super above the minimum come back on top of net profit at most lenders, with caps that differ everywhere. The full map, with the lender patterns underneath it, is the guide: self-employed home loans, how the bank reads your financials. The questions I get asked most:

What to bring, and the question to ask

You don't need a shoebox of paperwork. For nearly every employed applicant, a couple of recent payslips plus your income statement from the ATO covers the evidence test, and the year to date figure on the payslip does most of the work. Employed by family? Add the lodged tax return. Self-employed? Two years of returns and financials, or one if the lender runs a latest-year policy. The full list, and why it takes ten minutes rather than a weekend, is in what documents do you actually need from me.

Then the question to ask isn't "what's your rate" and it isn't "will you count my income". Almost everyone will count it. The question is "how do you assess my income": average or latest, how many weeks, which list, how much history. Those settings move your borrowing power more than anything else on the application, and the question only becomes useful when someone can see across a whole panel of lenders at once. That's the job.

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