I’ve recently changed jobs and get paid on comission, what can I qualify for?

I see this situation a lot.  It is usually a new Financial Advisor or Realtor and they are going from a job that paid them a salary or hourly wage and now they are a commissioned sales person.  This can be an issue when qualifying for a loan.

All the main loan programs today, Conventional, FHA, VA and USDA home loans require a borrowers income to be stable.  A borrower who is going to be paid on commission needs to have a two years history of being able to earn steady commission income.  That income is usually averaged for two years and the monthly average is the figure used to determine what they can qualify for.

On a side note, Self Employed individuals are treated the same way in regard to income calculation.  Both require us to submit 2 years tax return and average the income.

Even the stated income loans of the past didn’t allow for recent commissioned or self employment.  If you had just gotten your real estate license and wanted to qualify for a home loan, you had to go with the No Doc loan, where income, assets, and employment were not stated.  There were many companies willing to do those loans, albeit at a higher rate and larger down payment.

My advice for anyone considering a new career where you are going to be paid on commission is to maybe get the home first before making a career change.  Another option is to continue to work your old job and keep a steady income and do the commissioned job part-time or after hours.  This can be hard but you’ll make extra money and still qualify for the home loan.




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