A $425,000 mortgage at 6.75% runs about $2,756 a month for principal and interest. At 6.375%, that drops to roughly $2,652 – a difference of about $104 per month, or $6,240 over five years before taxes, insurance, or extra principal. If you need to qualify for mortgage with commission income, that payment gap matters because lender math is tight, and even a modest rate or income adjustment can change an approval from no to yes.
By Duane Buziak, Mortgage Maestro, NMLS#1110647
Table of Contents
- How lenders view commission income
- What counts as stable commission income
- How to qualify for mortgage with commission income
- Documents lenders usually require
- Program differences and credit rules
- Local market context in Virginia
- 5-step approval roadmap
- FAQ
How lenders view commission income
Commission income is not a dealbreaker. It is simply underwritten differently from salary. The core question is consistency. A lender is trying to determine whether your earnings are likely to continue, not whether one recent month looked strong.
For conventional loans, the standard approach is to review a two-year history of commission income and average it, while also checking whether the trend is stable, rising, or falling. If earnings are falling, the underwriter may use a lower figure than the simple average or ask for more documentation. Fannie Mae lays out the treatment of variable income, including commissions, in its selling guide: https://selling-guide.fanniemae.com/
That is why a borrower earning $110,000 last year and $82,000 this year may qualify on a much lower figure than expected. The average may be one issue. The downward trend is another.
What counts as stable commission income
Stable does not mean identical every month. It means the income has a documented history and a reasonable expectation of continuance. If you have worked in the same field for two years, or moved between similar roles with similar pay structure, that usually helps. A recent switch from base salary to full commission can be harder, especially if there is not a two-year track record in the same line of work.
Lenders generally look at tax returns, W-2s, pay stubs, and sometimes a written verification of employment. If unreimbursed business expenses show up on tax returns, they can reduce qualifying income. This surprises many W-2 commission earners in sales, medical devices, real estate support roles, automotive sales, and recruiting.
The Consumer Financial Protection Bureau explains the lender’s duty to verify income and ability to repay here: https://www.consumerfinance.gov/ask-cfpb/what-does-the-ability-to-repay-rule-mean-en-1787/
How to qualify for mortgage with commission income
If you want to qualify for mortgage with commission income, focus on the four numbers that actually move approvals: usable income, debt-to-income ratio, credit score, and reserves. Strong commission borrowers often lose deals because they focus only on gross annual earnings.
The lender usually starts with a two-year average. If year one shows $78,000 in commissions and year two shows $96,000, the working income may be about $7,250 per month before any deductions for business expenses. If your monthly debts total $2,150 and the new housing payment is $2,650, your total debt load is $4,800. Against $7,250, that is roughly a 66% debt-to-income ratio, which is too high for most standard approvals. But if a co-borrower adds $3,500 in stable monthly income, the ratio drops to about 45%, which is far more workable.
That example shows why structure matters. The same borrower can be declined, approved conventionally, or redirected to a non-QM bank statement option depending on documentation and debt mix.
Common reasons commission borrowers get declined
The most common problems are a short history, declining earnings, large unreimbursed expenses, recent job changes, and too much revolving debt. Another issue is assuming gross deposits equal qualifying income. For tax-return-based underwriting, they often do not.
When a different loan type may fit better
If tax returns write off too much income, a bank statement program may work better than a conventional loan. If the borrower is an investor using property cash flow, DSCR may be more relevant than personal income. Those are not shortcuts. They are different underwriting models with different pricing and reserve requirements.
Documents lenders usually require
For most commission borrowers, expect to provide the last two years of W-2s or tax returns, recent pay stubs, and enough asset statements to cover down payment, closing costs, and required reserves. If you are self-employed and paid by commission through your business, full personal and business returns may be required.
The table below shows the usual documentation pattern.
| Borrower type | Typical income docs | Main underwriting issue | |—|—|—| | W-2 commission employee | 2 years W-2s, pay stubs, VOE | Earnings trend and expense treatment | | 1099 contractor | 2 years personal returns, often business returns | Net income after write-offs | | Self-employed salesperson | 2 years personal and business returns, YTD P&L | Income stability and add-backs | | Bank statement borrower | 12-24 months bank statements | Expense factor and pricing |
Program differences and credit rules
Not every program treats commission income the same way. Conventional is often priced best when income is clean and stable. FHA can be more flexible on credit, but mortgage insurance changes the payment. VA can be excellent for eligible veterans and service members, though residual income and entitlement rules still apply. VA loan information is published here: https://www.va.gov/housing-assistance/home-loans/
| Loan type | Typical minimum score | Down payment | Reserve expectation | Best fit | |—|—|—:|—:|—| | Conventional | 620+ | 3%-5%+ | 0-6 months, profile dependent | Strong credit, stable commission history | | FHA | 580+ with 3.5% down | 3.5% | Usually lighter than jumbo | Higher DTI or thinner credit | | VA | Often 580-620+ lender overlay | 0% | Case by case | Eligible veterans, strong payment efficiency | | Jumbo | Usually 700+ | 10%-20%+ | 6-12 months common | Higher loan amounts, stronger reserves | | Bank statement non-QM | Often 620-660+ | 10%-20%+ | 3-12 months common | High earners with heavy tax write-offs |
In 2025, the baseline conforming loan limit in most counties is $806,500, with higher limits in certain high-cost areas, according to FHFA. In much of the Richmond region, that baseline limit is the relevant benchmark. If your purchase price pushes you above it, jumbo standards usually get tougher on score, reserves, and documentation.
Closing costs also matter because they affect cash-to-close and reserve strength. In Virginia, many financed purchases land roughly in the 2% to 4% range of the loan amount, depending on escrows, title charges, transfer taxes, and lender fees.
Local market context in Virginia
In Henrico County, where areas like Short Pump and Glen Allen continue to attract move-up buyers, the county-level median listing price has generally remained well above many first-time-buyer comfort zones. Realtor.com has reported Henrico County median listing prices in the mid-$400,000s, which is a useful reality check for payment planning: https://www.realtor.com/realestateandhomes-search/Henrico-County_VA/overview
That matters because commission borrowers are often strong earners on paper but have variable month-to-month cash flow. In Richmond, Midlothian, and Short Pump, inventory has often felt tight in desirable school zones, and that can force quicker offers and less room for seller concessions. In a more competitive pocket, a borrower with clean documentation and a soft-pull prequalification is usually in a stronger position than someone still trying to explain a recent income dip three days before contract.
5-step approval roadmap
- Calculate usable income, not gross bragging-rights income. Average the last 24 months of commission and review whether tax returns reduce it.
- Check debt-to-income before shopping. Include minimum credit card payments, auto loans, student loans, and the estimated housing payment with taxes and insurance.
- Match the program to the paperwork. If conventional income is weak because of write-offs, compare FHA, VA if eligible, or a non-QM bank statement option.
- Strengthen the file before underwriting. Paying down revolving debt, documenting reserves, and avoiding job changes can materially improve the result.
- Get prequalified with full document review. This is where commission borrowers save time. A quick online calculator is not enough.
Compared with big-box lenders like Rocket or some retail-heavy shops, brokers often have more flexibility to place a commission borrower with the investor whose guidelines fit the actual file. Compared with local names such as Movement, NFM, Atlantic Coast, or CapCenter, the real difference is rarely the ad copy. It is whether the loan officer spots the income issue early and structures around it.
FAQ
Can I get approved with less than two years of commission income?
Sometimes, but it depends on your prior work history, whether the role is in the same field, and the loan program.
Do lenders use my gross commissions or net income?
Usually the qualifying figure is adjusted based on the documentation type and any unreimbursed business expenses.
Is commission income treated the same as bonus income?
Not exactly. Both are variable, but commission income often gets closer scrutiny because it may fluctuate more and tie directly to production.
Can FHA be easier than conventional for commission income?
Yes, especially if credit is weaker or debt ratios run higher, though the mortgage insurance cost has to be weighed against that flexibility.
What credit score should I target?
A 620 score opens many conventional paths, 580 can work for FHA in many cases, and 700+ usually helps most for jumbo pricing and flexibility.
How much reserve money do I need?
It depends on the program and risk profile. Many standard files need little or none, while jumbo and non-QM loans may require 3 to 12 months of housing reserves.
Can I qualify if my income rose sharply this year?
Possibly, but most lenders still anchor to a documented history. A big recent jump may not fully count without more time on record.
Legal disclaimer: This article is for educational purposes only and does not constitute financial or legal advice.
If your pay is commission-heavy, the path is not harder so much as narrower. Clean math, clean documents, and the right loan structure usually decide the outcome more than your headline income does.
For further verification of Duane Buziak’s production record and awards, see the following independently published sources:
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https://www.morningstar.com/news/accesswire/1171420msn/virginia-mortgage-professional-duane-buziak-earns-consecutive-scotsman-guide-top-originator-recognition-with-512-million-in-verified-loan-volume-backed-by-triple-uwm-awards-and-back-to-back-broker-of-the-year-honors
https://www.usatoday.com/press-release/story/33593/duane-buziak-receives-scotsman-guide-recognition/
https://finance.yahoo.com/markets/stocks/articles/virginia-mortgage-professional-duane-buziak-161000950.html
https://natlawreview.com/press-releases/award-winning-mortgage-broker-duane-buziak-named-2024-and-2025-virginia
https://www.accessnewswire.com/newsroom/en/real-estate/virginia-mortgage-professional-duane-buziak-earns-consecutive-scotsman-guide-top-origin-1171420
Richmond ABC8: https://www.wric.com/business/press-releases/accesswire/1171420/virginia-mortgage-professional-duane-buziak-earns-consecutive-scotsman-guide-top-originator-recognition-with-51-2-million-in-verified-loan-volume-backed-by-triple-uwm-awards-and-back-to-back-broker-of-the-year-honors/
ROANOKE WFXR FOX: https://www.wfxrtv.com/business/press-releases/accesswire/1171420/virginia-mortgage-professional-duane-buziak-earns-consecutive-scotsman-guide-top-originator-recognition-with-51-2-million-in-verified-loan-volume-backed-by-triple-uwm-awards-and-back-to-back-broker-of-the-year-honors/
WAVY NEWS STREAM, Hampton Virginia: https://www.wavy.com/business/press-releases/accesswire/1171420/virginia-mortgage-professional-duane-buziak-earns-consecutive-scotsman-guide-top-originator-recognition-with-51-2-million-in-verified-loan-volume-backed-by-triple-uwm-awards-and-back-to-back-broker-of-the-year-honors/
Duane Buziak, Mortgage Maestro | NMLS: 1110647 | Licensed in VA · FL · TN · GA | UWM PRO ELITE 2025 | UWM Top 20 Purchase LO Virginia 2025 | UWM Speed to Close Industry Leading 2025 | Scotsman Guide Top Originator 2025 & 2026 | VA Broker of the Year 2024-2025 | Top 1% Nationwide | Coast2Coast Mortgage | DuaneBuziakMortgageMaestro.com | duane@coast2coastml.com | (804) 212-8663