How to Get a Mortgage With Commission Income
Published: September 28, 2026
Updated: September 28, 2026 • 8 min read
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Written by
Neel Patel
Reviewer
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Reviewed by
Jake Driscoll
Reviewer
Key Takeaways
- Commission income can count when you apply for a mortgage.
- Lenders usually look at your earnings over time instead of using your most recent or highest commission check.
- A short history or a recent drop in commission can reduce how much income counts.
Explore your flexible qualification options.
You can get a mortgage with commission income.
Lenders will look at how long you have earned commissions, whether your earnings are stable and how your current income compares with previous years.
Commission is one of several types of qualifying income that may require averaging rather than simply using your current paycheck.
Commission Income Mortgage Basics
| Question | General Answer |
|---|---|
| Can commission count? | Yes, when it meets the mortgage program's history and stability requirements |
| Do you always need 2 years? | No. Fannie Mae and Freddie Mac may accept as little as 12 months in some cases |
| How is it calculated? | Usually by comparing current year-to-date earnings with prior commission income |
| What if commissions increased? | The lender generally still uses an average rather than simply using the highest recent amount |
| What if commissions decreased? | The lender may use a lower amount or exclude the income until the decline has stabilized |
| Do you need tax returns? | Not simply because commission makes up a certain percentage of your W-2 income under current Fannie Mae and Freddie Mac rules |
How Much Commission History Do You Need?
Two years is a common benchmark for commission income, but it is not an absolute rule for every conventional mortgage.
Fannie Mae recommends a two-year history of commission income. Income received for a shorter period may still qualify when you have received it for at least 12 months and there are positive factors supporting the shorter history.
Freddie Mac also generally calls for a two-year consecutive history but permits a history of at least one year in some cases when the lender can support the income's stability.
A borrower who started earning commission three months ago therefore has a different qualification problem from someone with 18 months of consistent commissions.
How Lenders Calculate Commission Income
A lender generally does not use your latest commission check or simply annualize your best month.
The goal is to calculate a monthly amount that reflects your established earnings pattern.
Under current Fannie Mae rules, the lender first determines the year-to-date monthly commission amount and compares it with prior earnings.
If commission is stable or increasing, the lender can average the year-to-date and previous earnings. The calculation must include at least 12 months of income.
Example: Stable or Increasing Commission
Suppose you earned:
| Period | Commission Earned |
|---|---|
| 2025 | $36,000 |
| January through September 2026 | $30,000 |
That is $66,000 of commission over 21 months.
$66,000 ÷ 21 = about $3,143 per month
In this simplified example, the lender could potentially use about $3,143 in monthly commission income if the earnings meet the remaining underwriting requirements.
Your actual calculation can differ based on the documentation period, pay frequency and mortgage program.
What Happens if Commission Income Decreases?
A decline gets more scrutiny than an increase.
Under Fannie Mae's current rules, declining commission income cannot simply be averaged with higher prior earnings.
The lender first has to determine that the lower level of income has stabilized. If it has not stabilized, the commission income is not eligible for qualification.
Example: Commission Drops
Suppose you previously averaged $4,000 per month in commission, but your earnings dropped and have now stabilized around $2,500 per month.
The lender would not automatically average the old $4,000 level with the newer $2,500 level and use the higher result.
If the lender can document that the income has stabilized, Fannie Mae directs the lender to calculate qualifying income using the earnings since stabilization.
If commissions are continuing to fall, the income may not be usable yet.
What Documents Do You Need for Commission Income?
For a standard Fannie Mae conventional loan, commission income can generally be documented with either a verification of employment or your most recent pay stub plus two years of W-2s.
A verbal employment verification is also generally required.
Depending on the loan and underwriting system, documentation may include:
- Your most recent pay stub showing year-to-date earnings
- W-2 forms
- A written verification of employment
- A verbal verification of current employment
- Additional documentation when needed to explain changes in income
A full-documentation mortgage relies on documentation such as employment records, pay information and tax documents when applicable to establish the income used for qualification.
Do Commission Earners Need Tax Returns?
Not automatically.
An older mortgage guideline commonly repeated online says tax returns are required when commission represents more than 25% of your employment income. That is not a current Fannie Mae or Freddie Mac conventional requirement.
Freddie Mac removed that commission threshold from its requirements in 2019 after federal tax-law changes affected the treatment of unreimbursed employee expenses.
Fannie Mae's current standard commission documentation likewise calls for a verification of employment or a recent pay stub and W-2s rather than requiring tax returns based on a 25% commission threshold.
Tax returns can still be required for other reasons, particularly if the income comes from self-employment rather than W-2 employment.
Commission Income vs. Self-Employment Income
Earning commission does not automatically make you self-employed.
For example, a W-2 salesperson who earns a base salary plus commission is still an employee.
A real estate agent operating independently and receiving 1099 income may instead be underwritten as self-employed.
Fannie Mae generally considers you self-employed when you own 25% or more of a business from which you receive income.
That distinction changes the documentation and income analysis. If your commission comes through your own business, the rules for getting a mortgage when self-employed may apply instead.
How Commission Income Affects Your DTI
Usable commission is added to your other qualifying income before the lender calculates your debt-to-income ratio.
That can make a substantial difference.
Example: DTI With and Without Commission
Assume you have:
| Item | Amount |
|---|---|
| Monthly base salary | $5,000 |
| Qualifying monthly commission | $3,000 |
| Total monthly debts, including proposed housing payment | $3,200 |
Without commission income:
$3,200 ÷ $5,000 = 64% DTI
With $3,000 of qualifying commission:
$3,200 ÷ $8,000 = 40% DTI
Whether a particular DTI qualifies depends on the mortgage program and underwriting result. The DTI limits by loan type are not identical across conventional, FHA, VA and USDA financing.
You can also use a debt-to-income calculator to test the ratio using the amount of commission a lender can actually count.
The Most Common Reasons Commission Income Does Not Count
The biggest problems are usually history and trend, not the percentage of your income that comes from commission.
You Have Less Than 12 Months of History
For Fannie Mae and Freddie Mac conventional financing, a shorter commission history generally cannot be used when it is below 12 months.
Your Commission Is Still Declining
A lender cannot use an inflated historical average if recent earnings show that the income is falling and has not stabilized.
Your Documentation Does Not Support the Income
The commission shown on your application has to reconcile with the documentation used to verify your employment and earnings.
Your Employment Structure Changed
Moving from a W-2 commissioned position to independent contractor or self-employed work can change the applicable underwriting rules even if you perform similar work.
Conventional Mortgage Guidelines for Commission Income
Fannie Mae and Freddie Mac both allow commission income to be used for qualifying when the applicable requirements are met.
Fannie Mae recommends two years of commission history but permits at least 12 months in some cases with supporting positive factors.
Freddie Mac similarly generally uses a two-year history while allowing a period of at least one year when the lender can document sufficient stability.
Both agencies require lenders to evaluate the earnings trend rather than simply selecting the highest historical figure.
The other conventional loan requirements still apply, including credit, debts, assets and property eligibility.
FHA Guidelines for Commission Income
FHA uses a different commission-income framework.
Under current HUD guidance, commission income may be used when you have earned it for at least one year in the same or a similar line of work and it is reasonably likely to continue.
For FHA forward mortgages, the lender calculates commission using the lesser of:
- The average earned over the previous two years, or the period earned if less than two years, or
- The average earned over the previous one year.
This calculation can make recent lower earnings especially important.
FHA qualification also includes the program's other underwriting requirements, including the applicable FHA DTI requirements.
How Underwriters Review Variable Commission Income
Commission income requires more analysis than a fixed salary because the amount changes.
Mortgage underwriting looks at the pattern, not just the total.
An underwriter may compare:
- Year-to-date commission
- Prior-year commission
- Current employment
- How frequently commissions are paid
- Whether earnings are increasing, stable or decreasing
- Whether a decline appears to have stabilized
Fannie Mae does not require lenders to obtain separate proof that commission will continue for a specific number of years unless there is reason to believe the income may stop.
Freddie Mac's current guidance does require the income to be likely to continue for at least the next three years.
Buying a Second Home With Commission Income
Commission income does not become unusable simply because you are buying a second home.
The lender still analyzes the commission history and qualifying monthly amount under the applicable income rules.
The loan must then meet the separate requirements for a second home, including occupancy, LTV and reserves.
If your income comes from business ownership rather than W-2 commission employment, second-home financing for self-employed borrowers involves additional income documentation.
What if Most of Your Income Is Not W-2 Income?
Traditional mortgage underwriting is not the only way income can be documented.
If you are paid primarily as an independent contractor rather than a W-2 commissioned employee, the lender may treat the income as self-employment.
Some non-QM programs also use alternative documentation for borrowers whose income does not fit traditional underwriting.
Those options can include 1099 home loans and other approaches to getting a mortgage without W-2 income.
Requirements are program-specific.
What if Your DTI Is Still Too High?
Even when all of your commission qualifies, your DTI may still be above the amount permitted for the loan.
Depending on your situation, changes that can reduce DTI include paying down qualifying debts or choosing a lower housing payment.
A larger down payment can also reduce the mortgage balance and monthly payment, although the effect depends on the loan terms.
Other mortgage options for a high DTI depend on the rest of your financial profile.
How Much Home Can You Afford With Commission Income?
Use the commission amount that is likely to qualify, not your best-case annual earnings.
If you earn a $60,000 base salary and $50,000 in commissions this year, entering $110,000 into an affordability calculation can overstate your budget if the lender can use only $35,000 of annual commission income.
Instead, estimate the monthly commission figure using your earnings history and then use that alongside your fixed income in a home affordability calculator.
Commission Income Can Change Before Closing
Mortgage approval is based on the income and financial information the lender can support through closing.
A significant employment or income change during the process can require the lender to update its analysis.
If commission falls sharply, you change jobs or your compensation structure changes after preapproval, the qualifying income may need to be recalculated.
That is one reason a mortgage can be denied after preapproval if the financial picture changes materially before closing.
Prepare Your Commission Documentation Early
Commission-heavy files can take more analysis than a straightforward fixed-salary application.
Before applying, gather your recent pay statement and prior W-2s and review your year-to-date commission against previous earnings.
If your income has declined, be prepared for the lender to determine when the lower earnings level stabilized.
Knowing the qualifying commission amount early can make a mortgage preapproval more useful because your price range can be based on income that is actually eligible for underwriting.
Other Types of Variable Income
Commission is only one form of variable employment income.
- Bonus income can potentially count based on its history and trend.
- Overtime income can potentially count when there is an acceptable earnings history.
- Part-time income may be used when the employment and earnings meet the applicable requirements.
- Income from a second job can potentially be combined with your primary income when the additional employment has sufficient history and stability.
Bottom Line
Commission income can count toward a mortgage, but the lender generally will not qualify you using your latest or highest commission check.
For conventional financing, two years of history is common, but Fannie Mae and Freddie Mac can permit a shorter history of at least 12 months in some circumstances. Stable or increasing income can generally be averaged, while declining income receives more conservative treatment.
The key number is the monthly commission income the lender can document and use, not simply the amount you expect to earn this year.
FAQ
Can You Use Commission Income to Qualify for a Mortgage?
Yes. Commission can be qualifying income when it meets the mortgage program's history, documentation and stability requirements. The lender generally reviews current year-to-date commissions alongside previous earnings to determine a monthly amount that can reasonably be used for qualification.
How Many Years of Commission Income Do Lenders Need?
It depends on the program. Fannie Mae and Freddie Mac generally favor a two-year commission history but may accept at least 12 months in some circumstances. FHA requires at least one year of commission income in the same or a similar line of work.
How Do Lenders Average Commission Income?
For Fannie Mae conventional financing, stable or increasing commission is generally calculated using year-to-date and prior earnings over an acceptable history. The calculation must include at least 12 months. Different programs use different formulas, and declining income receives additional scrutiny.
What if My Commission Income Decreased This Year?
A decline does not automatically prevent you from qualifying, but the lender generally cannot use a higher historical average without addressing the decrease. Under Fannie Mae rules, the lender must determine that the income has stabilized. If it has not, the commission may be excluded from qualifying income.
Do You Need a Letter From Your Employer to Use Commission Income?
Not necessarily a separate letter guaranteeing future commissions. Fannie Mae generally permits a completed verification of employment or a recent pay stub with two years of W-2s, along with a verbal employment verification. Additional documentation may be needed if the income history or trend requires explanation.
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