Mortgage Declined Because CIS Income Fluctuates

Mortgage declined because CIS income fluctuates is a common issue for contractors working under the Construction Industry Scheme. Even where overall earnings are strong, variable monthly income can make lenders uncomfortable when assessing long-term affordability.

This guide explains why fluctuating CIS income often leads to mortgage declines, how lenders assess CIS applicants, and what options may still be available.

What Is CIS Income?

CIS income refers to earnings paid under the Construction Industry Scheme, where tax is deducted at source before the contractor receives payment.

Many CIS workers are self-employed subcontractors, meaning their income is not fixed and can change depending on workload, contracts, and time off.

Why Do Lenders Struggle With Fluctuating CIS Income?

Lenders prioritise stability and predictability when assessing mortgage affordability.

While CIS income may be high on average, monthly fluctuations can create uncertainty about whether repayments will remain affordable in quieter periods.

What lenders are concerned about

Lenders typically worry about:

• Gaps between contracts
• Seasonal income changes
• Periods of reduced hours or site closures
• Reliance on overtime or short-term projects

Even where annual income is strong, uneven monthly patterns can lead to a decline.

How Do Lenders Assess CIS Income?

Lenders do not all assess CIS income in the same way.

Some treat CIS applicants similarly to standard self-employed borrowers, while others apply contractor-style assessments.

Common assessment methods

Lenders may use:

• An average of the last two or three years’ income
• The most recent year only, if income is rising
• Day rates multiplied by assumed working days
• Net income after allowable expenses

If income shows sharp variation month to month, averaging often results in a lower usable figure.

Why Fluctuating CIS Income Leads to Mortgage Declines

Mortgage declined because CIS income fluctuates usually reflects policy rather than affordability in real life.

Lenders stress-test income to ensure repayments remain affordable even during quieter periods. If income dips below their thresholds, the application may be declined.

Typical decline triggers

• Large income differences between months
• A weaker most recent year
• Gaps in CIS statements
• Reduced income during winter or holiday periods

One weaker period can outweigh several strong months in a lender’s calculation.

Does Length of Time on CIS Matter?

Yes. Trading history is critical.

Applicants with several years of CIS income are usually viewed more favourably than those who have only recently moved into CIS work.

Typical expectations

• Two or more years of CIS records preferred
• Consistent pattern of work over time
• Evidence of repeat contracts or long-term engagements

Shorter histories increase the likelihood of a decline.

Can a Mortgage Be Declined Even If Average Income Is High?

Yes, and this is a common frustration for CIS workers.

Lenders do not lend on peak earnings. They lend on sustainable income under stress-tested conditions.

If affordability only works in strong months, lenders may conclude the risk is too high.

How Expenses Affect CIS Income Assessments

CIS contractors often have higher expenses than employed applicants.

Tools, travel, insurance, and equipment costs reduce net income, which is the figure lenders usually rely on.

High expenses combined with fluctuating income can significantly weaken affordability.

What Documents Do Lenders Use to Assess CIS Income?

Lenders typically require a combination of documents.

Common requirements

• CIS payslips or statements
• Tax calculations and overviews
• Bank statements showing income consistency
• Evidence of ongoing contracts

Inconsistencies between documents can quickly raise concerns.

What Options Are Available After a Decline?

A mortgage declined because CIS income fluctuates does not automatically mean there are no alternatives.

Option one: use a lender comfortable with CIS income

Some lenders specialise in CIS applicants and are more flexible with income variation, particularly where long-term averages are strong.

Option two: wait for stronger averages

Allowing time for weaker periods to drop out of the averaging window can improve affordability.

Option three: apply jointly

Applying with a partner who has stable employed income can reduce reliance on CIS earnings.

You can learn more about lender flexibility in our guide on specialist mortgage lenders.

How Deposit Size Influences CIS Mortgage Decisions

Deposit size plays an important supporting role.

While it does not replace income evidence, a lower loan-to-value can reduce lender risk where income fluctuates.

This can sometimes make the difference between a decline and an approval.

Are CIS Workers Treated the Same as Other Self-Employed Applicants?

Not always.

Some lenders treat CIS income more favourably due to tax being deducted at source, while others treat it strictly as self-employed income.

This inconsistency explains why one lender may decline while another accepts.

How to Prepare Future Applications With CIS Income

Preparation is especially important for CIS workers.

Steps that may help

• Keep consistent work patterns where possible
• Avoid long unexplained gaps between contracts
• Maintain clear, organised CIS documentation
• Reduce unnecessary expenses before applying

We explore supporting documents in more detail in our guide on what lenders look for on bank statements.

Common Misunderstandings About CIS Mortgages

• “Tax deducted at source guarantees approval”
• “Average income is all that matters”
• “One strong year is enough”

For lenders, predictability matters as much as earnings.

Key Takeaways

• Mortgage declined because CIS income fluctuates is policy-driven
• Lenders assess sustainability, not peak earnings
• Income averaging often reduces borrowing power
• Specialist lender routes may still be available

If you want personalised advice, speaking to a regulated mortgage adviser may help clarify next steps.

This guide provides general information only. Personalised mortgage advice should always come from a regulated mortgage adviser.