Commission-Only Sales: Averaging and a Down Year

Commission-only pay can support a mortgage when the history is documented. The underwriter is usually averaging 12 or 24 months, not taking your best listing year. A down year is usually averaged in, not ignored. A declining trend can reduce the qualifying average even if the most recent month recovered. Snapshot as of 2026-08.

How the average is built

When income is overtime, bonus, commission, or 1099, underwriters typically average a documented history (often 12–24 months) rather than using the highest recent month.

A simple decision framework:

• Stable or rising two-year history. Many files average the two years (or year-to-date plus last year, depending on the guide and the trend).
• Down year. The low year usually stays in the math. You can explain it. You rarely get to delete it.
• New to commission. Time in the same line of work matters. Switching from salaried teaching to 100% commission real estate last month is not the same file as a decade of W-2 plus commission in the same industry.

Documents that usually show up

• Two years of W-2s (if any base) and/or 1099s plus tax returns and transcripts.
• Year-to-date paystubs or a commission statement that matches deposits.
• A written explanation for a gap, a broker change, or a market down year.

If you are 1099 rather than W-2, use the 1099 documentation checklist. Overtime on a W-2 is a different “likely to continue” test: overtime guide.

What happens next

Do not shop using last month’s commission check as monthly income. Run the income calculator with a conservative average, then talk with a loan officer about which average the investor will accept for your product. That conversation is not an approval.