How lenders read your income
Almost every difficult home loan is an income problem rather than a borrower problem. Not because the income is not there, but because one lender's policy counts it and another's does not. This is the map of how each kind of income is actually assessed, and where the differences between lenders are large enough to change what you can buy.
The one thing worth understanding
Lenders do not have a shared definition of income. Each sets its own rules on how much overtime it counts, how long you must have held a second job, whether a probationary employee qualifies at all, how commission is averaged and whether a business owner's retained profit exists. Those settings are written policy, not judgement calls, and they differ enormously.
The practical consequence is that the same payslips can produce borrowing figures more than a hundred thousand dollars apart depending on where the application lands. Matching the file to a lender whose written policy already fits your income shape is the single highest-value thing a broker does.
What lenders are actually testing
Two things: whether the income is genuine, and whether it will continue. Evidence answers the first, which is why documents matter so much. Continuity answers the second, which is why lenders look for history in a second job, service in the same industry after a job change, and a defined return date on parental leave.
Almost everything below is a variation on those two questions. Where you can answer both with paperwork, the file usually works. Where you cannot, the answer is generally a different lender rather than a different plan.
Employment situations
Where the job itself is the question a lender is asking.
On probation
Continuous service in the same industry carries real weight with the lenders whose policy allows it.
OpenCasual employment
How long you need in the role, and which lenders count casual income at close to full value.
OpenContract work
PAYG contract, sole trader and company contractor are three different assessments.
OpenParental leave
Being assessed on your return-to-work income rather than your reduced income today.
OpenSecond job and multiple sources
The history required before a second income counts, and why sources are not simply added up.
OpenWorked example: probation
Six weeks into a new job, a pay rise, and the house that will not wait.
OpenVariable and layered income
Where the money is real but the amount changes, which is where lenders differ most.
Overtime and allowances
Rostered penalties and shift loadings, and the lenders that count them properly.
OpenCommission and bonus
Contractual versus discretionary, averaging periods, and the percentage counted.
OpenHealthcare and shift work
Nurses, midwives, paramedics and allied health, where penalties are the structure of the pay.
OpenWorked example: overtime
A third of the income one lender would not count, and another would.
OpenSelf-employed and business income
Where the accounts, not the payslips, decide the assessment.
Self-employed lending
Add-backs, averaging, and why the same accounts read so differently between lenders.
OpenLow doc and alt doc
Where the paperwork lags a genuinely strong business, and what it costs.
OpenTrust and company structures
When the structure that suits your tax reduces the income a lender can see.
OpenSelf-employed income calculator
The three readings a lender might take of the same figures, side by side.
OpenNot sure which of these describes you?
Most people are more than one. Charles can tell you how your whole income picture reads, and which lenders read it most fully.
Employment and income questions
Why do lenders give such different borrowing figures on the same income?
Because each lender writes its own rules on which income counts and how much of it. The assessment rate they test repayments at, the minimum living expenses they assume, and the percentage of overtime, commission or casual income they include are all set independently. Those three settings alone routinely move the same household's figure by six figures.
What evidence makes the biggest difference?
Two years of payslips and both PAYG summaries for anyone with variable income, and an employment letter that describes the arrangement accurately rather than loosely. A letter calling rostered penalties "available overtime" reads very differently from one describing them as part of the role. The document centre lists what applies to each situation.
I have just changed jobs. Do I have to wait?
Not necessarily. Some lenders apply a blanket probation rule; others accept probationary employment where you have continuous prior service in the same industry and a permanent contract. If that describes you, the wall you have hit is one lender's policy rather than a market-wide position.
Does having several income sources help or hurt?
It helps once each source is established, and it complicates the assessment in the meantime. Lenders assess each stream under its own rules rather than adding them together, so a second job may need six to twelve months of history before it counts at all, and rental income is discounted for vacancy and costs.
Is it worth applying to my own bank first?
Worth asking, not worth assuming. Your bank knows your transaction history but applies one policy, and if that policy discounts your kind of income heavily, the answer will be lower than the market's. A decline also leaves an enquiry on your credit file, so the order of applications matters more than most borrowers realise.
Tools and related guides
General information only, not credit or financial advice. Income assessment policies differ between lenders and change over time; nothing here is a statement of any particular lender's current policy or a promise that an application will be approved. Your position is confirmed in a full assessment.
Your income is the file. Get it read properly.
Twenty minutes with Charles: how each part of your income reads across lenders, and which of them counts the most of it. Free, no credit check.
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