How lenders look at commission & variable income borrowers
1Lenders usually average your last 2 years of commission or variable income from your tax returns.
2If your income is rising, the average works in your favour. If it fell, lenders may use the lower year.
3A guaranteed base salary counts in full; the commission part is averaged on top.
4Realtors and other independent agents are often treated as self-employed.
Get ready
What lenders will ask you for
T4s or T4As and Notices of Assessment for the last 2 years
A year-to-date earnings statement or recent commission statements
An employment or brokerage letter showing your pay structure and start date
90 days of statements showing your down payment
Photo ID
Your options
Which kind of lender fits you
Option 1
A lender
Works well once you have 2 years of steady or rising variable income.
Option 2
B lender
For shorter histories or a recent dip in income.
Option 3
Co-borrower
Adding a salaried co-borrower can strengthen the application.
Avoid these
Common mistakes
!Expecting lenders to use this year's strong numbers before they show up on a tax return.
!Switching from salary to commission right before applying.
!Not keeping commission statements that back up your tax returns.
!Underestimating tax owed on commission, which lenders will spot.
Take action
Your first steps
1Download your last 2 Notices of Assessment.
2Get a year-to-date earnings statement.
3Ask for a letter confirming your pay structure and start date.
4Make sure your taxes are paid up to date.
5Start the intake to see what your averaged income supports.
The intake
What your application will ask
Your online application goes one topic at a time and saves every answer and document as you go, so you can stop and come back. It never runs a credit check, and a licensed mortgage professional reviews it and follows up.
For commission & variable income borrowers
How is your pay split between base salary and commission, tips or other variable income?
What did you earn in each of the last 2 years, and so far this year?
How long have you been paid this way, in this job or field?
Plus the basics everyone answers 13
Your full name, email, mobile number and the best time to call.
The city you live in, and whether you are a Canadian citizen, permanent resident, or other status.
Are you applying alone or with someone else? If with someone, their name and how you are related.
Your goal: buy, refinance, renew, take out equity, or consolidate debt?
The property type (house, condo, multi-unit) and the city it is in.
Will you live in it, rent it out, or both?
The purchase price or estimated value, and your target closing or renewal date.
Your down payment or available equity, and where it comes from (savings, RRSP/FHSA, a gift, sale of another property).
Your approximate yearly household income before tax.
Your monthly debt payments: car loans, credit cards, lines of credit, student loans, support payments.
Your own estimate of your credit score: excellent, good, fair, poor, or not sure.
In the last 7 years, any bankruptcy, consumer proposal, collections, or missed mortgage payments?
May the broker contact you? (A credit check is only ever run later, with your separate written consent.)
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Answers
Questions people ask
How do lenders calculate commission income?
Usually the average of the last 2 years on your tax returns, sometimes with this year's statements as support.
Can I qualify with less than 2 years of commission?
Sometimes, especially if you moved from a salaried role in the same field. B lenders are more flexible.
Are realtors treated as self-employed?
Usually yes, so lenders use the income on your Notices of Assessment after expenses.
Does seasonal income count?
Yes, with a history showing it repeats each year, often including EI received in the off-season.
Does starting the intake affect my credit?
No. It is only questions. A credit check comes later, with your permission.
General information, not mortgage, legal or tax advice. Lender rules change and every application is reviewed on its own facts. Your application and documents are stored privately and go only to a licensed mortgage professional at Top Mortgages Inc; they are never sold, and no credit check is run without your separate written consent.