Step-by-step client guide
Bonus and commission income
If a big chunk of your pay is variable, the lender is going to average it — not take your best year. Plan around the average, not the peak.
Who this guide is for
Sales reps, real estate agents on T4, bankers and finance professionals with annual bonuses, anyone whose total comp is meaningfully above base salary.
Why this is harder than a standard file
Lenders apply 2-year averaging on T4 box 14 income that exceeds base salary, with discounts on certain commission structures.
Track exactly where you are on this file.
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Add Box 14 from your last two T4s, divide by 2, then subtract your annual base. That's the variable income a lender will recognize.
Your plan
0 of 3 plan steps completeDocuments to assemble
0 of 3 documents gatheredMistakes we see clients make in this scenario
- ·Budgeting against your best year. Lenders will not.
- ·Switching jobs to a different commission structure 6 months before applying — the 2-year history resets.
- ·Assuming a verbal bonus promise from your manager counts. If it isn't in the employment letter, it doesn't exist for underwriting.
Red flags that will sink the file
- Commission income that dropped more than 30% year-over-year without explanation.
- Less than 24 months of bonus/commission history at the current employer.
What this realistically costs you
- No rate premium for variable income at A-lenders. The cost is in qualification — borrowers often qualify for $50–$150k less than their gross income would suggest.
How the underwriter actually reads this
Box 14 minus base salary, averaged over 24 months, is the qualifying portion. A single strong year does not move the average meaningfully.
What moves this file up
- Two consecutive years of strong bonus/commission income
- Employment letter that clearly separates base from variable
- Use base salary alone in your affordability math; treat the average as upside
Questions clients ask us
Because next year might not be. The averaging rule is what protects the lender — and indirectly you — from over-borrowing on a single peak year.
You'll likely qualify on base salary alone until you have 12–24 months of history in the new structure. Some lenders will use a partial average after 12 months.
Get a real, underwritten pre-approval — not a system-generated number.
We'll route your file to a lender whose policy fits this scenario. No credit pull until you've seen the plan.
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Written and reviewed by the Canadian Mortgage Compass Editorial Desk. This page is general information for Canadian readers and is not mortgage, legal, tax, or financial advice, and not an offer of credit. Rules, rates, and lender policies change; confirm your own situation with a licensed mortgage professional in your province. Editorial policy · Corrections