Conventional loans · Fannie Mae B3-3.3-02Commission, overtime, bonus and tips: how lenders count variable income

Fannie Mae lets lenders count bonus, commission, overtime and tip income paid by an employer, with rules on documentation, history and averaging (Selling Guide B3-3.3-02, updated March 4, 2026). The lender gets a completed Request for Verification of Employment (Form 1005), or the most recent paystub and two years of W-2s, plus a verbal verification of employment; tips not reported by the employer can be shown with two years of tax returns including Form 4137. A two-year history is recommended, but a history of at least 12 months can be accepted when positive factors offset the shorter period. The lender works out how often the income is paid, then compares this year's monthly pace with prior years. If it is stable or rising, the qualifying amount is the average of year-to-date and prior-year earnings over at least 12 months. If it is falling, the income can be used only once it has stabilized, averaged from the point it stabilized. An annual bonus is annualized – divided by 12. A documented, non-recurring event outside the borrower's control that temporarily stopped the income can be left out of the calculation. These rules are for income paid by an employer on a W-2; an agent paid as an independent contractor owns the business and falls under the self-employed rules instead.