How to Count Commissions and Bonuses and Tips


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This episode covers how to count commissions and bonuses and tips. Before the highlights, here’s a quick overview. Be sure to read through for the code word!

Conventional Loans

  • Commissions and Bonuses are treated very similarly
  • Conventional loans need 12 months receipt of commission/bonus with no job gap greater than 30 days
  • It’s okay if borrower changed employers with same industry and line of work
  • Conventional requires 24 months of tip income, NO GAPS receipt, and the employer needs to confirm that the tip income is expected to continue

VA Loans

  • VA requires 24 months receipt on commission/bonus with no job gap greater than 30 days
  • VA requires 24 months of tip income, NO GAPS receipt, and the employer needs to confirm that the tip income is expected to continue

FHA Loans

  • FHA requires 12 months receipt on commission/bonus with no job gap greater than 30 days
  • FHA requires 12 months of tip income, NO GAPS receipt, and the employer needs to confirm that the tip income is expected to continue


*The following transcript has been edited for clarity.

Eddie Knoell — I’m Eddie Knoell.

Tom Knoell — And I’m Tom Knoell.

Eddie — Welcome, everyone. This is the Mortgage Brothers Podcast, and today we are talking about what many of us receive, our commissions, bonuses, and tips, all that income.

Tom — Right, all that income. “Hey, Tom and Ed, I’ve been working as a waitress or waiter for 10 years and making tips, does that count?” Or, “Hey Tom and Eddie, I’ve been earning bonuses for the last nine months. Can I include that in on my pre-qual?”

Tom — So here we are to answer some of those questions. And I think Ed, you and I were talking, the volume, or the majority share of our borrowers probably work a little bit more with bonuses and commissions than they do tips.

Eddie — Right.

Tom — So why don’t we cover that first, and why don’t you do that, and then I will splinter the tips portion off and cover that at the end.

Eddie — Okay. So as we’ve mentioned before on podcasts, the loan programs we generally deal with, like 95% of loans out there in the residential world, are conventional loans, VA loans, or FHA loans. And so those are the three categories. The three programs we’re going to talk about in relation to these.

Eddie — Okay, so conventional loans. What’s important to know is that you need to have 12 months of history receiving commission or bonus income.

Tom — One year, one year.

Eddie — Not 11 months. Okay. It’s 12 months. And it can come from multiple employers. So if you get tips come from one restaurant for six months and another restaurant for six months –

Tom — When you say “tip,” you mean “bonus?”

Eddie — I’m sorry, I mean bonuses or commissions.

Tom — You’re trying to step in my world, dude.

Eddie — That’s right. Okay. Commission incomes. So forget about the restaurant, all right. If you sell water filters, right, you get commissions or bonuses. If you work for one company, making commissions for six months or bonuses for six months, and another company doing the same similar sales, we can combine that, both six months, as long as, you know. So multiple employers, that’s conventional financing, we will accept that.

Tom — Right. And I’ll interject that the industry needs to be very similar. So it can’t be bonuses from selling water filters for the first six months and then bonuses you receive from haircutting the next six months.

Eddie — Right. Okay. So, then VA financing requires that these commissions or bonuses have to be received for 24 months. So just double it, right. And it cannot have any job gaps. And it must come from the same employer, okay.

FHA financing. It’s similar to the conventional financing. It’s 12 months receipt, but again, one employer. Can’t combine two employers. FHA, again, 12 months receipt of commissions or bonuses. One employer.

Tom — Okay, perfect.

Eddie — How about tip income?

Tom — Perfect. Tip income. So there are a lot of people that are making tip income. I’m not going to guess at what demographic or age group they are, but we get a lot of calls from people about tip income. And I think the easiest way to think about it is you’re very similar to a self-employed borrower, in that there typically is going to be two years worth of tip income that is going to be needed. Now when you mentioned conventional versus VA versus FHA, I’ll just break it up. Conventional and VA will require the two years. So again, if you are a waitress or a waiter making tip income, you can kind of think of yourself as a self-employed entrepreneur, and you’re going to need two years of that tip income.

Tom — If you do go FHA, it’s actually only one year, which is a really, really big deal. So we wanted to make sure that we made mention of that tip income, AKA, really feels like self-employed income. There are a couple of little nuances, which is interesting. Ed, over the years, a lot of the tip income used to be cash.

Eddie — Yeah. In the past it was just, everyone tipped with cash at the table. Now it’s 95% of those tips are on a credit card.

Tom — Right. So 20 years ago, if we get a person with tip income, a lot of that would be unreported. Today, because the tip’s going on credit cards, those are reported to the employer, which is put on your pay stub.

Eddie — That’s right. The payroll department gets those and it generates it through the pay stub and the W2’s, okay. Now, so if you are one of those people who receive cash…

Tom — You know a bar… I don’t know, maybe everyone’s paying with credit card, even bartenders, but to me, I always feel like bartenders, we get a lot of cash. But I don’t go out very much.

Eddie — Not anymore.

Tom — Yeah.

Eddie — But I don’t know any bartender, any waitress or waiter who actually, really claims most of their tips if they’re cash.

Tom — If they’re cash. Right.

Eddie — It’s so rare, but if you did claim them, we would accept them. If you’ve been actually reporting them on your tax returns for two years.

Tom — Yeah. So even if they weren’t reported to your employer and you decided at the end of the year, “You know what, I really need to kind of report this, I made such a big amount of tips and I feel bad not reporting it,” and you do decide to do that. That can still be a part of the equation.

Tom — So anyway, tip income two years, except for FHA, it’s one year, which is a nice little piece.

Eddie — Okay.

Tom — Anything that we left out?

Eddie — We did leave out something, our podcast special.

Tom — Oh.

Eddie — That’s right, that…

Tom — Boom.

Eddie — If you call in or write in with the code word “Zebra,” as Tom says.

Tom — That’s right. “Zebra,” you won’t forget that. Probably because you’re wondering why in the heck would you come up with that.

Eddie — And if you’re watching this right now still and you made it through most of this podcast, then again, if you just call us or write, do the online quick quote request, we will give you a $50 gift card, Amazon, just for getting a quote. And again, you have to be a real person who’s really trying to get a mortgage, but get a quote from us, we’ll give you a $50 Amazon gift card.

Tom — Awesome.

Eddie — All right, everyone, you have a good week.

Tom — All right. Thanks folks.

Eddie — Take care.

Tom — Let’s get out of here.

Eddie — Hey guys, thanks for listening to the Mortgage Brothers Show. Please let us know if you have any questions you’d like us to answer on this podcast. You can email your questions to, or yours truly, at, and be sure to ask us for a free quote on your next mortgage. Tom and I will personally work with you and help you through the whole process.

Signature Home Loans, LLC does not provide tax, legal, or accounting advice. This material has been prepared for informational purposes only. You should consult your own tax, legal, and accounting advisors before engaging in any transaction. Signature Home Loans NMLS# 1007154, NMLS# 210917 and 1618695 equal housing lender.