What Income Do Lenders Count for a Home Loan in Australia?

Short answer

Australian lenders generally start with income they can verify and reasonably expect to continue. Regular salary or wages may be treated differently from overtime, bonuses, commission, rent, business income or payments that are temporary or uncertain.

APRA's residential mortgage lending guide says prudent lenders discount or disregard temporarily high or uncertain income. It describes a discount of at least 20% as prudent practice for most non-salary income, with a higher discount appropriate in some cases. This is regulatory guidance about prudent risk management, not a promise that every lender will use the same percentage.

Use the Borrowing Power Calculator for a broad scenario based on the income entered. The result does not verify income, reproduce a lender's policy or indicate approval.

How different income types may be treated

The table is a guide to evidence and uncertainty. It is not a universal lender matrix. A lender can ask for different documents, use a longer history or exclude an income type under its own policy.

Why lenders discount variable income

A mortgage may run for decades, while a bonus, overtime roster or commission period can be short. A lender therefore needs to decide how much of the reported amount is dependable enough to use in a stressed repayment assessment.

APRA says a prudent lender may use the lowest documented amount over several years or apply a discount to an average over a similar period. It specifically identifies bonuses, overtime, rental income, investment income and variable commissions as income that is generally discounted significantly.

This does not mean non-salary income is ignored in every application. It means the full amount shown on a recent payslip or bank statement may not be the amount used in the serviceability calculation.

A simple income-shading example

Assume an applicant has:

• $90,000 regular gross salary;
• $12,000 average annual overtime; and
• $26,000 expected annual rent from an investment property.

If a lender used the full salary and applied a 20% discount to the overtime and rent, the simplified assessed income would be:

• salary: $90,000;
• overtime: $9,600; and
• rent: $20,800.

That totals $120,400, before separately allowing for property expenses, tax, living costs and debts.

This arithmetic illustrates one possible discount. It is not an estimate of what a particular lender will accept. APRA says rental income should also allow for property expenses and that larger discounts can be appropriate where vacancy risk is higher.

What lenders may use to verify income

APRA lists several forms of evidence a prudent lender may combine:

• recent payslips showing regular salary or wages;
• confirmation of employment status, including permanent, casual, part-time, contractor or fixed-term work;
• bank statements showing regular salary credits;
• tax returns and notices of assessment;
• written information from an employer, accountant or tax adviser;
• business activity statements; and
• income and cash-flow evidence for a self-employed applicant.

Providing one document does not require a lender to accept the stated amount. The evidence is considered with expenses, existing debts, repayment history, the proposed loan and lender policy.

Rental income needs two adjustments

Expected rent is not usually treated like guaranteed salary.

APRA's guide says a prudent policy applies a minimum 20% haircut to expected rent, with a larger haircut where non-occupancy risk is higher. It also says investment-property expenses, such as strata costs, should be included in living expenses or deducted from expected net rental income.

For example, $650 a week is $33,800 a year before vacancy. A 20% haircut gives $27,040. Council rates, insurance, strata, management and other costs still need to be considered in the assessment.

The Investment Property Yield Calculator can model rent, vacancy and entered holding costs, but it does not reproduce the lender's serviceability calculation.

Why two lenders can produce different results

APRA sets prudential expectations, including a minimum 3 percentage point serviceability buffer for ADIs, but lenders retain their own credit policies and risk settings.

Results can differ because lenders may use different:

• evidence periods for variable or self-employed income;
• discounts for overtime, bonus, commission or rent;
• minimum living-expense benchmarks;
• treatment of credit-card limits and other debts;
• assessment rates, subject to APRA's minimum requirements; and
• rules for probation, contract work, retirement or property type.

The Debt-to-Income Ratio Calculator answers a narrower question by dividing entered debts by entered gross income. It is not the same as a full serviceability assessment.

Checks before using a borrowing estimate

1. Separate regular base income from variable income.
2. Use an evidence-backed average rather than the highest recent month.
3. Enter expected rent separately from salary.
4. Include existing debt limits and recurring expenses.
5. Test a lower-income scenario if a material amount is uncertain.
6. Ask the lender or licensed mortgage broker which documents and policy apply.

Do not substitute a national wage statistic for personal income. The Average Weekly Earnings glossary entry explains why the ABS average is not a lender benchmark.

Sources

• APRA: APG 223 Residential Mortgage Lending, current guide dated 19 June 2025 and checked 17 August 2026. See paragraphs on income verification, variable income, rent and serviceability.
• ASIC: Responsible lending, checked 17 August 2026.
• ASIC Moneysmart: Loan rejection, checked 17 August 2026.

General information disclaimer

This guide provides general information only. It is not financial advice, credit advice, a loan application, an approval or a statement of any lender's current policy. Income evidence and treatment vary by lender and circumstances. Confirm requirements with the lender or a licensed professional before relying on a borrowing estimate.

Last updated: 17 August 2026.