Variable Earnings
Bonus, commission, and tip income — averaged across the right look-back period and tested for a stable or declining trend.
Variable income rewards careful analysis. Bonuses and commissions can swing year to year, and using the wrong averaging window either overstates or understates what a borrower truly earns. Underwriters expect a defensible average and a clear view of the trend.
IncomeCalculator.com pulls variable components from pay stubs and W-2s, averages them over the appropriate period, and surfaces whether the income is rising, stable, or declining — applying the conservative figure when the trend turns down.
What to upload
- Pay stubs showing year-to-date bonus or commission
- W-2s for the past two years
- Tax returns when commission expenses are involved
- An employer statement on the nature and continuance of variable pay, when needed
How the calculation works
Isolate variable components
Bonus, commission, and tip income are separated from base pay so each is evaluated on its own merits.
Choose the look-back window
The assistant averages over the correct period — generally two years — and explains the window it used.
Test the trend
If the most recent period is lower, the calculation applies the more conservative figure rather than a flattering average.
Supported programs
Conventional, FHA, VA, and Non-QM. Variable income analysis pairs with standard employment for borrowers who have both.
Common questions
What look-back period is used?
Typically a two-year average, though the assistant will use a longer or shorter window when the documentation and program guidelines call for it.
How is declining commission treated?
A downward trend triggers the conservative figure and a clear note, rather than averaging away the decline.
Are tips included?
Yes, when reported and documented. Cash tips that appear on pay stubs and tax returns are evaluated like other variable income.