Paid on Commission? What Lenders Look For on a Commission Income Mortgage

You had your best year yet. You cleared more than you ever have, you paid the tax on it, and you walked into the mortgage conversation feeling good about the number. Then the income the lender uses comes back well below what you actually earned.

That gap is the most common surprise for people paid on commission. It is not the lender doubting you. It is how a commission income mortgage gets calculated, and once you know the rules you can plan around them instead of finding out three days before your condition date.

The First Question on a Commission Income Mortgage: Employee or Self-Employed?

Commission gets paid in two very different shapes, and lenders read them in two very different ways.

Base plus commission. You get a T4. Tax, CPP and EI come off at source. Your base is the fixed part and the commission is the variable part. Lenders call this variable employment income.

Full commission, nothing deducted at source. You invoice or you get paid gross, and you handle your own tax. Most lenders treat this as self-employed income, even if you have a brokerage or a head office you report to. Real estate agents are the classic example. So are a lot of insurance advisors, recruiters and vehicle sales people.

That second group gets caught off guard. You do not feel self-employed. You have a desk, a manager and a dress code. But if nobody is deducting tax from your cheque, the file gets underwritten like a business owner's file, which means a longer document list and a two-year track record of the business running. The same thinking applies to people earning platform income, which we cover in our guide for gig workers applying for a mortgage.

Sorting this out first saves you a month. It decides which documents you gather and which lenders are a realistic fit.

How Lenders Calculate Commission Income

Commission is variable income, so the usual approach is to average your last two years and qualify you on that average.

Here is the part most people miss. Averaging is the treatment for income that is holding steady or climbing. If your income is going down, many lenders stop averaging and use the most recent year instead, because that is the more conservative number.

Two examples on the same two years of earnings:

• You earned $72,000, then $88,000. Many lenders average the two and use $80,000.
• You earned $88,000, then $72,000. Many lenders drop the average and use $72,000.

Same two numbers, different order, an $8,000 difference in qualifying income. On a purchase, that can be worth tens of thousands of dollars of buying power.

There is a second rule that costs commission earners deals. The two years of income generally has to come from your current employer or brokerage. Change companies the month before you buy and you can reset that clock, even if you moved for more money and the work is identical. If a brokerage move and a home purchase are both on your list this year, get the mortgage sorted first, or at least call us before you hand in your notice.

One more. If an underwriter looks at your two-year average and does not believe it holds up going forward, they can adjust the income down to what they think is realistic. A single huge year built on one unusual deal will get a harder look than two solid, similar years.

What Documents a Commission Income Mortgage Needs

If you are on base plus commission and get a T4:

• A letter of employment or a recent pay stub, and
• Two more documents that support two years of income. Usually some mix of last year's T4, your most recent year-end pay stub, your most recent Notice of Assessment, and a CRA Proof of Income statement (the option C print).

If you are full commission and treated as self-employed:

• Two years of personal tax returns with the matching Notices of Assessment, or a CRA Proof of Income statement.
• One more document showing the business has been running at least two years. A business licence, your GST/HST returns, or the statement of business activities from your return all do the job.
• Confirmation you do not have personal tax owing. Unpaid tax will stop a file cold, and it is fixable if you know about it early.

If you want the longer version of how an underwriter works through a self-employed file, we break it down in our guide on how lenders read self-employed income off your documents.

A timing note for the self-employed group. The filing deadline for self-employed Canadians is June 15, so for part of the year your most recent return simply does not exist yet. Lenders are used to this and generally work from the two most recent years available, as long as the newest one is not too far back.

What Your Write-Offs Do to a Commission Income Mortgage

This is where tax planning and mortgage planning pull in opposite directions.

If you are a commission employee, the Canada Revenue Agency lets you deduct employment expenses, but only if you meet every one of its conditions. Your contract has to require you to pay your own expenses. You normally work away from your employer's place of business. You are paid wholly or partly by commission on sales or contracts you negotiate. You did not receive a non-taxable travel allowance. And your employer has signed a Form T2200 for you. You then claim the expenses on a Form T777.

The CRA also caps it. Your deductions cannot be more than the commissions you received that year, with vehicle interest and capital cost allowance being the exceptions.

Now the mortgage side. A lender reads the income on your return. Every dollar you write off lowers that number. The mileage, the home office, the client lunches and the advertising reduce your tax bill and your qualifying income at the same time. How strictly a lender applies this varies, which is one more reason to have someone look at your returns before you file rather than after.

There is some relief on the A-lender side. Many A-lenders allow a gross-up of business net income of up to 15% for a sole proprietor or a partnership, and commission income reported on line 13900 of the T1 is one of the lines that qualifies. That gross-up is generally not available if you are incorporated. An incorporated file is read on the salary and dividends you take out of your own company, backed by your returns and assessments.

None of this means stop claiming expenses you are entitled to. It means know the price. If a purchase or a refinance is on your list in the next 12 to 18 months, have that conversation with your accountant and your broker in the same week, not in separate years.

When the Two-Year Average Does Not Work

Plenty of good commission files do not fit the standard box. Maybe you are 14 months into a new industry. Maybe last year was soft. Maybe the write-offs already went in. There is more than one path, and a broker's job is to find the right one rather than pushing you at a single door.

A-lenders. Banks and credit unions. Debt-service ratios usually land around 39/44, the stress test applies, and the documentation above has to be clean. These carry the best terms when your file fits.

Alternative lenders, often called B-lenders. More room to work. Debt-service ratios can stretch toward roughly 50/50, a credit score below 600 can still work depending on the whole file, and a self-employed commission earner can often qualify on about 12 months of business bank statements instead of the most recent Notice of Assessment. Expect around 20% down and a lender fee, and expect a shorter term meant as a bridge back to an A-lender in a year or two. We explain the trade-offs on our B-lender mortgage page.

Private lenders. Equity first, income second. Usually 20% to 25% or more in down payment or equity, priced for the risk, and set up with a written exit plan from day one. A private mortgage is a short-term tool, not a place to park a mortgage for a decade.

The honest message for anyone paid on commission is that the first no is rarely the end of it. It usually means the file went to the wrong lender, or it went in before the income was presented properly.

How Gold Lion Mortgages Can Help

We work with a lot of people whose income does not arrive in the same amount every two weeks. Realtors, sales reps, recruiters, small business owners and contractors all land on our desk for the same reason. One lender's calculator said no, and nobody explained why.

We will read your last two years the way an underwriter will, tell you the number they are likely to land on, and tell you before you shop what that number buys. If the A-lender route works, we take it. If the file needs an alternative or a private solution for a year while you build the history, we will say that too, and we will tell you what the exit looks like. You can see how we work with variable income on our self-employed mortgage page.

Call (587) 740-0048 or visit goldlionmortgages.com/apply.

Frequently Asked Questions

Can I get a mortgage if I am paid on commission?

Yes. Commission income is accepted income. Lenders want to see that it is stable, so they normally look for a two-year history and average it. The paperwork is heavier than a salaried file, and the way your income is structured decides which lenders are the best fit for you.

How do lenders calculate commission income for a mortgage?

Most lenders average your last two years of commission income. If your income is declining, many will use the most recent, lower year instead of the average. The two years usually needs to come from your current employer or brokerage.

Do I need two years of commission income to get a mortgage?

For most A-lender approvals, yes. Under two years is treated as an exception and gets reviewed case by case, often with strong support elsewhere in the file. Alternative lenders have more flexibility if you are still building the history.

Do my write-offs affect my mortgage approval?

They can. Lenders qualify you on the income that shows on your return, so employment expenses and business write-offs reduce the income they can use. A gross-up of up to 15% is available on some A-lender files for sole proprietors and partnerships, which gives back a portion of it.

Are real estate agents self-employed for a mortgage?

Usually yes. If you earn entirely commission with no tax deducted at source, most lenders underwrite you as self-employed even though you work under a brokerage. That means two full years of the business operating, tax returns with matching assessments, and proof the business is real.

Paid on commission and thinking about buying, renewing or refinancing? Call Gold Lion Mortgages at (587) 740-0048 or apply online at goldlionmortgages.com/apply.

Published: September 21, 2026. Mortgage guidelines, lender programs, and qualifying requirements change. Contact Gold Lion Mortgages to confirm current requirements for your file.

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