First Time Buyers Variable Bonus Income Mortgage: What Lenders Allow

Many first-time buyers receive part of their income through bonuses, commission, overtime or performance pay. But when it’s time to apply for a mortgage, questions often arise about how lenders treat this type of income. Understanding the rules around a first time buyers variable bonus income mortgage can help you prepare your documents, understand what lenders look for and set realistic expectations about borrowing capacity.

This guide explains how lenders assess variable income, what percentage they typically count, and how you can strengthen your application. This article provides general information only and does not offer regulated mortgage advice.

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Do Lenders Accept Bonus Income for First-Time Buyers?

Yes — most lenders accept bonus income, but each treats it differently depending on:

• How regular the bonus is
• How long you have received it
• Whether it is guaranteed, discretionary or performance-based
• The industry you work in
• How consistent your total earnings are

Lenders use bonus income to support affordability, but usually at a reduced percentage because it is not guaranteed in the same way as base salary.

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How Lenders Assess Variable Bonus Income

Bonus income is not treated the same as your fixed annual salary. Lenders typically assess it by reviewing:

• Payslips covering the last 3–6 months
• P60 summaries
• Employer confirmation (where required)
• Annual bonus trend over 2–3 years (for certain lenders)

From these checks, lenders aim to understand the reliability, regularity and sustainability of your variable income.

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Typical Bonus Income Percentages Lenders Allow

Lenders rarely accept 100% of bonus income, especially for first-time buyers. Common approaches include:

1. 50% of bonus income counted

Many lenders include half of your average bonus amount within affordability calculations.

2. 60–75% of bonus income counted

Some lenders offer higher allowances if bonuses are consistent over multiple years.

3. 100% of bonus income counted (rare)

Only a few lenders accept full bonus income, and usually only when:

• It is guaranteed contractually
• You work in a sector with stable bonus structures
• Bonus amounts remain highly consistent year-on-year

4. Annualised assessments

Some lenders take:

• The last 12 months’ bonuses
• Your average over the last 2–3 years
• The lowest of the last few years to be cautious

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What Counts as Bonus Income?

Lenders may assess various types of variable pay, including:

• Performance bonuses
• Annual company bonuses
• Quarterly or monthly bonuses
• Commission
• Overtime
• Tips or service charges (role-dependent)
• Shift allowances
• Sales incentives

Each type is treated differently depending on whether the income is stable and provable.

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How Regular Bonus Income Helps First-Time Buyers

If you receive variable income regularly, this can work in your favour.

Lenders may be more flexible when:

• Bonuses appear every month
• Yearly bonuses are consistent
• Commission makes up a predictable portion of your total pay
• Overtime is frequent and not ad hoc

The more evidence you have of long-term consistency, the more likely a lender is to include the income.

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How Irregular Bonus Income Is Treated

If bonuses are inconsistent — for example, large one-off payments — lenders often:

• Accept only a small percentage of bonus income
• Average bonus income over several years
• Use the lowest bonus figure from recent years
• Ignore bonus income entirely in some cases

If your bonus varies significantly, lenders will take a cautious approach.

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Documentation First-Time Buyers Will Need

To assess variable bonus income, lenders typically ask for:

• Last 3–6 months’ payslips
• Most recent P60
• Employer reference (sometimes required)
• Breakdown of bonus types (if available)
• Bank statements showing the payments

The more evidence of consistency you can provide, the better.

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How Bonus Income Affects Affordability

Bonus income influences:

• Maximum borrowing amount
• How lenders stress-test your income
• Whether you pass affordability checks

Example (Illustrative Only):

Applicant earns:

• £30,000 base salary
• £6,000 annual bonus

If lender counts 50% of bonus:

• £3,000 added to income
• Assessed income = £33,000

If lender counts 75%:

• £4,500 added
• Assessed income = £34,500

Different lenders can therefore offer very different borrowing limits.

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Joint Applications and Bonus Income

In joint applications, both applicants’ incomes — including bonus income — are assessed individually and combined for affordability.

Examples:

Scenario 1: One applicant has bonus income

Only that person’s bonus is assessed and reduced based on lender policy.

Scenario 2: Both applicants have variable incomes

Lenders may apply different percentages to each person depending on consistency.

Scenario 3: One applicant has stronger bonus history

This may significantly increase joint borrowing capacity.

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Sectors Where Lenders Commonly Accept Bonus Income

Some industries typically receive predictable bonuses or commission. Lenders may be more flexible for:

• Finance
• Retail
• Sales
• Tech
• Healthcare shift work
• Hospitality roles with consistent tips
• Public sector roles with structured overtime

However, this depends on employer documentation and past income records.

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Challenges First-Time Buyers May Face With Bonus Income

1. Bonus not guaranteed

If it is labelled discretionary, lenders may reduce its weighting.

2. Large variations year-on-year

Inconsistent bonus income may lower borrowing potential.

3. New in role

Lenders prefer a track record of earning bonuses.
If you’ve recently changed job, bonus income may not yet count.

4. Short-term contracts

If income is variable and your contract is temporary, lenders may be more cautious.

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How First-Time Buyers Can Strengthen Their Bonus-Income Application (General Information Only)

Although not personalised advice, many buyers choose to prepare by:

1. Gathering strong documentation

Keep P60s, payslips and employer letters organised.

2. Demonstrating consistency

The more consistent your bonus history, the better lenders will view it.

3. Avoiding reliance on bonus income

Try to show that base salary can cover key expenses.

4. Reducing other commitments

Lower credit commitments can help accommodate variable income.

5. Timing your application

Applying after receiving a strong bonus payment may improve the assessed average.

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Can Bonus Income Be Used for a Deposit?

Yes. Bonus income received and saved can form part of your deposit, provided you can show:

• Bank statements showing the funds
• Proof the money came from employment
• A clear audit trail

Lenders welcome deposits from proven income sources.

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Summary

Understanding how lenders treat a first time buyers variable bonus income mortgage helps you prepare a strong application. Lenders commonly include bonus income, but usually at a reduced percentage — often 50–75% depending on consistency and documentation. Regular, predictable bonuses help strengthen affordability, while irregular or one-off bonuses may be treated cautiously.

Your bonus income, combined with your base salary and overall financial behaviour, forms a key part of the lender’s affordability assessment. This article provides general information only. For personalised advice, regulated mortgage support is needed.