Bonus Income Mortgage FAQ
General information only. This is not financial advice.
Last reviewed: 2026-06-06
Can I use bonus income to get a larger mortgage?
Yes, but how bonus is treated varies significantly between lenders. Some include 100% of averaged annual bonus in affordability; others cap it at 50% or 25%. A small number exclude bonus entirely and rely only on base salary. Lenders typically want at least two years of bonus payment history evidenced by P60s and payslips. A specialist broker can identify which lenders are most generous with your specific bonus structure.
How do mortgage lenders calculate bonus income?
Most lenders average your bonus over the last two years using P60s, then apply a percentage of that average — typically 50% to 100% — to your affordability figure. Some lenders use the lower of the two years rather than an average. If your bonus increased significantly last year, a lender using the most recent year only would be more favourable than one using a two-year average.
What evidence do I need to include bonus income in a mortgage application?
You will typically need your last two P60s, your most recent three months of payslips, bank statements confirming bonus credits, and either your employment contract or a letter from your employer confirming that bonus is a regular part of your remuneration. If your bonus is paid as shares or restricted stock units, additional documentation will be required.
Does it matter when in the year my bonus is paid?
Yes. If your bonus is paid annually and you are applying mid-year, your most recent payslips will not reflect it. Lenders will then rely on prior P60s. Some lenders will consider year-to-date bonus accruals if supported by your employer — worth asking your broker. The timing of your application can affect which evidence is available and which lenders are best placed to assess you.
What if my bonus is discretionary rather than contractual?
Discretionary bonuses are treated more cautiously than contractual ones, as the employer has no legal obligation to pay them. Most lenders will still consider a discretionary bonus with two years of consistent payment, but may apply a larger discount to the income figure used. A letter from your employer confirming the expectation of continued payment can help offset lender concerns about the discretionary nature of the arrangement.
What if my bonus was lower last year than usual?
A single lower bonus year is usually manageable if the broader trend is positive — lenders will average two years, smoothing out the dip. If you can explain the lower year (restructuring, industry-wide slowdown, parental leave), a supporting letter from your employer helps. A strong base salary and solid credit profile will also reduce the impact of variable pay concerns. If both recent years were below typical earnings, it may be worth waiting until the next P60 reflects a recovery before applying.
Risk warning
Your home may be repossessed if you do not keep up repayments on your mortgage. Variable income is subject to lender-specific affordability caps and may not be included in full.
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