How is income calculated when bonuses vary by quarter?

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    I get paid a salary plus bonus and commission each quarter. Sometimes I receive both, sometimes one or the other and sometimes neither. I understand that paystubs are used the quality my income and w2 are just for proving stability. My question is how would be income be calculated? Say I have averaged $70,000 the passed two years but the bonus/commission included in that is of various amounts each quarter. My current pay stubs don’t show much bonus/commission so far but one good quarter and I would make what I’ve averaged the other years(say $5,000) in one quarter. In my case, would naca just use my tax returns averaged income the passed two years?

    Thanks in advance!


    Bonuses and overtime don’t count unless you can get your employer to write a letter on company letterhead that states the bonus or overtime is guaranteed or mandatory. If you can prove you will get a bonus every quarter without fail you can use the minimum bonus amount or the average depending on the situation. The idea is on a worst case scenario the bank wants to give you a loan you can not only afford but also continue to save money while still paying your mortgage on the lowest possible income your employer guarantees which would be your base salary.


    I get about 50% of my compensation from Commission and Bonuses, and 50% from base salary. In my case, they used my last year’s average earnings, counting only Commission and Salary, to make the most conservative estimate and I had to continue to show that my current earnings continued to be at the same level during the Qualification process.


    Hello coquipr79,

    Long story short, you will be treated as if you were self-employed or a 1099 employee. We will look at the past 12 months in detail and average out the past two years from tax returns. (Make sure to provide 12 months of bank statements instead of just 3.) That method will allow commissions to be included and averaged out.

    Whether bonuses can be included depends on a couple of things. If it is an individual bonus for meeting a certain sales goal for example, that may not be eligible for inclusion. If it is a company-wide bonus based on overall performance, it may be easier to include. The regularity of the bonus and what it is based on wil make the difference.

    Tim Trumble
    Online Operations, NACA

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