# Qualifying for a Mortgage When Most of Your Income Is Bonus or Commission

> How Canadian lenders weight bonus and commission income — two-year averaging, the 'haircut' on variable pay, and when a longer track record swings approval.

Category: Qualification
Last verified: 2026-04-20
Source: https://ratellow.com/scenarios/bonus-commission-income-mortgage-canada

## Who this is for
Salaried earners whose bonuses or commissions represent 20%+ of total compensation, including sales, tech, finance, and performance-based roles.

## Summary
Canadian prime lenders average bonus and commission income over the prior two years and apply a haircut — typically using the lower of the two years, or 50-100% of the average depending on lender policy and trend. A strong base salary plus a stable bonus history qualifies without issue; a thin base with lumpy variable pay often requires 3 years of history or a step down to alternative lenders.

## Worked example
Assume a tech sales rep with a $90k base and OTE of $180k. Last two years' actual variable: $85k and $95k. Lender sees $90k base + 2-year average of $90k variable = $180k total, often with the variable portion discounted 10-25%.

- Base salary (used at 100%): Always included in full
- Variable pay, 2-year trending up: 80-100% of 2-yr average
- Variable pay, 2-year trending down: Lender may use lower of the two years only
- New role, <2 years variable history: Often excluded entirely from qualification

## Framework
### The standard rule
Two years of T4s plus two years of Notices of Assessment. Lender averages the variable component (bonus/commission lines) across the two years. If year 2 is higher than year 1, most lenders use the 2-year average. If year 2 is lower, most lenders use year 2 only (the conservative read). NOAs are the source of truth — pay stubs alone aren't enough for variable income.

### The haircut
Most prime lenders discount variable income 10-30% even after averaging, recognizing that future bonuses aren't guaranteed. Some lenders are more generous for certain industries (unionized, long-tenured, commissioned salary-floor roles) and stricter for others (pure commission with no base, new-to-industry). Ask your broker which lenders treat your specific role best — the spread on approved borrowing power can be $75-125k between the most and least generous lender.

## Key considerations
- A role change mid-way through the 2-year window usually resets the clock — even if the new role pays more.
- Restricted stock units (RSUs) and equity comp are typically treated more conservatively than cash bonus — often excluded or used at 50% only if vested and verifiable.
- Group RRSP matching and benefits don't count as qualifying income.
- If you've had a promotion with a higher OTE, letters from HR stating the new OTE can sometimes be used alongside historical averages.

## Common mistakes
- Using a recent strong year's paystubs alone as the basis of expectation — lenders will always go back to NOA-verified history.
- Assuming commission-only income qualifies like salary. It rarely does, and often requires a B-lender route until 3 years of history.
- Forgetting that self-employment in the form of a contract with a single employer (common in tech) is treated as self-employment, not employment, regardless of how the payer codes it.

## Action steps
1. Pull your last two T4s and NOAs. Calculate base + 2-year average variable as your qualifying income starting point.
2. If trending down, get ready to qualify on year-2 numbers only and adjust your price range accordingly.
3. If variable pay is >40% of total, shop the file across 3+ lenders — approved amount will vary meaningfully.

## Sources
- Guideline B-20 — Residential Mortgage Underwriting — https://www.osfi-bsif.gc.ca/en/guidance/guidance-library/final-revised-guideline-b-20-residential-mortgage-underwriting-practices-procedures