If you earn a basic salary plus commission, overtime, or bonuses, you’re not alone. In South Africa, many professionals — from salespeople to nurses to freelancers — have variable income structures.

But when it comes to applying for a home loan, it’s important to understand how banks view this kind of income. Spoiler alert: it’s not treated the same as a guaranteed salary.

Here’s what you need to know.

What Is Variable Income?

Variable income includes:

• Commission (e.g., sales performance);
• Overtime pay;
• Bonuses; and
• Incentives or shift allowances.

These payments are not fixed, which means they can fluctuate month to month. That makes lenders treat them with more caution.

How Banks Assess Variable Income

Banks want to see that variable income is consistent, sustainable and proven over time.

Most lenders will require at least 6 to 12 months’ worth of payslips or bank statements to confirm that your commission or overtime is regular and not a once-off spike.

Tip: The longer your track record, the more likely they are to include your full commission in affordability.

They Don’t Always Use 100% of It

Even if you’ve earned commission every month, banks may only include a portion of it in your affordability calculation — typically around 60-80%, depending on the lender and your income pattern. Each bank has their own method of calculation for variable income streams.

For example:

• Nedbank will use 60% of overtime and 80% of commission for the latest 6 months consecutive income;
• Standard bank and ABSA will remove the highest and lowest amount over the last 6 months and use the average of the remaining 4 months;
• FNB uses the lowest value month from the last 3 months.

For bonuses, most banks will only use the income if the bonus is received on a monthly basis. However, showing the latest 3 years of a bonus being received may be enough to get it included and averaged monthly.

What You Can Do to Strengthen Your Application

• Provide full documentation - at least 6 months’ payslips and matching bank statements, and maybe more if the last 6 months is not reflective of typical income patterns;
• Structure your payslip - If possible, ask your employer to separate basic and commission clearly. Ambiguity on payslips can slow down or weaken your application;
• Reduce other debt - If your commission isn’t fully considered, your debt-to-income ratio matters even more; and
• Work with a bond originator - An experienced originator knows which banks are more flexible with variable income — and how to present your documents for the best chance of approval.

Earning commission or overtime doesn’t disqualify you from getting a bond — but how it’s presented matters. The more consistent and well-documented your income, the stronger your application.

Use a reputable mortgage broker

Using a reputable broker will ensure you get more value out of this free service – including the full-scale service (as outline above), professional advice, utmost confidentiality and respect with your personal information, speedy approvals, competitive rates and priority with banks.

Phoenix Bonds is a premium mortgage broker in South Africa, with a proven track record (check out the reviews on Google).  For expert advice and personalised service, fill in your details HERE and one of our experienced Consultants will be in touch.