Couple enjoying the view from their new Nevada home.

Qualify for a Mortgage in Nevada on Commission Pay

Q: What is the standard requirement for commission income history when applying for a mortgage?

A lender's seasoning period is a mandatory waiting time after you purchase or refinance a property before you can access the full after-repair value (ARV) for a cash-out refinance. Most DSCR lenders require a seasoning period of 6 to 12 months. Refinancing before the seasoning period concludes typically means the lender will base the loan amount on your original purchase price plus rehab costs, which severely limits the amount of equity you can cash out. Waiting until after the period allows you to borrow against the full market value you created through your renovations.

Q: Is it possible to get a mortgage with less than two years of commission income?

To justify a higher appraised value, you should provide the appraiser with a detailed and organized renovation packet. This packet removes guesswork and provides concrete evidence of the work performed. It should include: a cover letter summarizing the major upgrades, a detailed scope of work document itemizing all improvements, compelling before-and-after photos showing the property's transformation, copies of paid invoices and receipts for materials and labor, and copies of any official building permits that were issued for the work.

Q: How do lenders calculate my qualifying income from commission?

No, LTV limits for cash-out refinances vary significantly among different DSCR lenders, as each has its own guidelines and risk tolerance. While purchase loans may reach 80% LTV, cash-out refinances are often capped at 70% or 75% LTV. The specific LTV offered to an investor is influenced by several factors, including: Credit Score (higher scores typically qualify for higher LTVs), DSCR Ratio (a stronger income-to-debt ratio may result in a better LTV offer), Property Type (a single-family home might receive a higher LTV than a multi-unit property), and Loan Amount (some lenders may offer different terms based on the size of the loan).

Q: Can my previous job history help my mortgage application if I recently switched to a commission role?

Your property's monthly rental income is the foundation of a DSCR loan approval. The formula is: DSCR = Gross Rental Income / Total Monthly Housing Payment. A higher rent results in a higher DSCR. This proves to the lender that the property can comfortably support a larger loan payment, which in turn allows you to qualify for a larger loan amount and maximize your cash-out.

Q: What documents are required to prove my commission income for a loan?

Yes, it is often possible to pay for closing costs with the proceeds from your new loan, meaning you don't need to bring cash to closing. However, these costs are not added on top of your loan limit. Instead, the closing costs are subtracted from the total cash-out funds available to you after your existing mortgage is paid off. The total loan amount, including these costs, cannot exceed the lender's maximum LTV limit based on the property's appraised value.

Q: Are FHA loans available for applicants with new commission income?

Investors can make several avoidable errors that reduce their available cash-out funds. The most common mistakes include: Poor Documentation (failing to provide an appraiser with a thorough renovation packet can lead to a conservative and lower valuation), Refinancing Too Soon (not waiting for the lender's seasoning period to expire is a costly mistake that forces the loan to be based on cost rather than value), Lacking a Tenant (attempting to refinance a vacant property is less favorable, as lenders prefer the security of a signed lease over estimated market rents), and Ignoring Lender Differences (accepting the first loan offer without comparing options can mean missing out on better LTV limits or shorter seasoning requirements from other lenders).

Q: How is my income calculated if I earn both a base salary and commission?

The ideal time to begin the refinance process is 30 to 45 days before your lender's seasoning period expires. This allows you to gather all necessary documentation, secure an appraisal, and complete underwriting so that you can close immediately once the seasoning requirement is met. Crucially, by this time, the property should also be 'stabilized,' which means you have a qualified tenant in place with a signed lease and have collected at least the first month's rent.

Specialized In Jumbo Loans, Investor Loans, DSCR Loans, Non-QM Financing, Commercial Mortgages, and Tax-Informed Lending Strategies

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TL;DR

Lenders typically require a two-year history of commission income, but exceptions exist for strong applicants.
Your previous salaried role in the same industry can significantly strengthen your mortgage application by proving stability.
Proper documentation, like a detailed employer letter and offer, is crucial for proving future earning potential to underwriters.

How Long Do You Need a Commission Job to Get a Loan?

For mortgage underwriters, income stability is the most important factor. Commission-based pay, by its nature, is variable, which makes lenders cautious. The standard rule across the mortgage industry is a two-year history of receiving commission income. Lenders want to see your earnings over a 24-month period to establish a reliable average.

However, there are important exceptions. If you have been in your commission-based role for at least 12 months but less than 24 months, you may still qualify. To be considered for this exception, you typically need to demonstrate strong compensating factors, such as:

A high credit score (usually 700 or above). (The data, information, or policy mentioned here may vary over time.)
Significant cash reserves or assets. (The data, information, or policy mentioned here may vary over time.)
A low debt-to-income (DTI) ratio. (The data, information, or policy mentioned here may vary over time.)
A history of working in the same industry or a related field, which shows you have the skills to succeed in your new role.

This one-year exception can be particularly valuable for homebuyers in competitive Nevada markets like Henderson, where waiting another year could mean facing higher home prices. Proving your long-term viability in the role becomes the central task.

Can You Get a Loan with Less Than One Year of Commission?

Getting a mortgage with less than 12 months of commission history is extremely difficult with traditional loans (Conventional, FHA, VA). Lenders simply do not have enough data to create a reliable income average. In this scenario, your best options might be to wait until you cross the one-year mark or explore non-traditional loan products designed for unique income situations.

How Lenders Calculate Qualifying Income From Commission

Lenders use a conservative approach to calculate commission income to ensure you can afford your monthly mortgage payments. They don't just look at your best month; they look at the long-term trend.

The most common method is a 24-month average. The underwriter will take your total commission earned over the past two years and divide it by 24 to get your average monthly qualifying income.

Example Calculation:

Year 1 Commission: $80,000
Year 2 Commission: $100,000
Total Commission: $180,000
Average Monthly Income: $180,000 / 24 months = $7,500

Your qualifying income in this scenario is $7,500 per month.

Lenders will also analyze your year-to-date (YTD) earnings to ensure your income is stable or increasing. If your YTD earnings are trending lower than the previous year's average, the lender will likely use the lower, more conservative figure. For instance, if your 24-month average is $7,500, but your YTD average is only $6,500, the underwriter will use $6,500 for qualifying purposes.

Can Your Previous Salaried Job Help Your Application?

Yes, absolutely. This is one of the most powerful tools you have, especially if you have less than two years of commission history. If you switched from a salaried position to a commission-based role within the same industry, it demonstrates continuity and expertise.

Consider this scenario: You worked as a salaried marketing manager for a homebuilder in Reno for five years, earning $75,000 annually. You then transitioned to a 100% commission role as a new home sales agent for a different builder in the same city. Even though your income type changed, your industry and line of work did not. An underwriter will view this favorably because:

It proves you have established skills and a network in the field.
It reduces the perceived risk of your new commission-only role.
It creates a narrative of career progression rather than an unstable job hop.

Your previous W-2s and employment history become critical evidence to support your application. This continuity can be the deciding factor in getting an exception to the standard two-year rule.

What Documentation Proves Future Earning Potential?

Since past performance is limited, you must provide clear and convincing documentation about your future income. A strong paper trail helps the underwriter justify the loan approval. You will need to gather the following:

Mortgage application documents for commission-based income

Signed Offer Letter or Employment Contract: This is non-negotiable. The document must clearly outline your commission structure (e.g., percentage of sales, draw details, payment schedule).
Two Years of Tax Returns (if applicable): Provide your full federal returns, including all schedules. If you have less than two years of commission, provide the most recent year and the prior year showing your salaried income.
Most Recent Pay Stubs: You'll need pay stubs covering the last 30 days. These must clearly show the breakdown of your earnings, including any commission payouts.
Verification of Employment (VOE): The lender will send a VOE form to your employer to confirm your job title, start date, and income. It is crucial that your HR department fills this out accurately and reflects the details in your offer letter.

Will a Letter From Your Employer in Las Vegas Make a Difference?

A letter from your employer, often called a 'Letter of Explanation' (LOE), can be extremely influential. This is especially true if you are new to the role or working in a major hub like Las Vegas, where the job market is dynamic. This letter goes beyond the standard Verification of Employment and adds context for the underwriter.

A strong employer letter should include:

Your official start date and job title.
A detailed explanation of the commission structure.
Confirmation that you are a permanent, full-time employee (not a temporary contractor).
An expression of confidence in your continued success, potentially citing your performance to date or the company's strong outlook.
A realistic projection of your anticipated annual earnings, based on your current performance or the performance of others in similar roles.

This letter provides a third-party validation of the income potential you've presented, giving the underwriter more confidence to approve the loan.

Is It Possible to Get an FHA Loan With New Commission Income?

Yes, it is possible. FHA loans are often more flexible than conventional loans, but they still have strict guidelines for documenting income. The FHA handbook requires a two-year history of commission income. However, it also provides an exception for applicants with a commission history of one to two years.

To qualify for the FHA exception, the lender must determine that your income is likely to continue. They will analyze factors like your previous experience in the industry and the stability of your employer. The documentation requirements are similar to a conventional loan: pay stubs, tax returns, and a thorough Verification of Employment are essential. Getting an FHA loan with less than one year of commission income is not possible under current guidelines.

What Are the Rules for Mixed Income (Base Salary + Commission)?

Having a job that combines a base salary with commission is a significant advantage when applying for a mortgage. The lender views your base salary as stable, predictable income, which immediately forms a solid foundation for your application.

Calculating commission income for a home loan

Here’s how it works:

Base Salary: Your guaranteed base salary is counted in full as qualifying income, provided you have pay stubs to support it.
Commission Income: The commission portion of your pay is treated separately and is subject to the same averaging rules. You will still need a 12-to-24-month history of earning that commission for it to be counted.

For example, if you have a sales job in Henderson with a $60,000 base salary and you've been earning commissions for 18 months, the lender will immediately count the $5,000 per month from your salary. They will then calculate the 18-month average of your commission payments and add that to your base income. This blended approach makes qualifying much easier than with a 100% commission role. Navigating mortgage underwriting with commission income has its nuances. If you are planning your home purchase in Nevada, understanding these rules ahead of time can make all the difference. A mortgage strategist can help you structure your application for success.

Ready to see how your commission income translates into a home loan? Our mortgage strategists can help structure your application for success. Take the first step and Apply now.

Author Bio

David Ghazaryan is the expert mortgage strategist and founder behind iQRATE Mortgages. With a mission to fund home loans that traditional banks won't touch, David specializes in helping clients with unique financial situations, including those recovering from foreclosure or bankruptcy. He expertly crafts smart, strategic, and stress-free mortgages by leveraging a vast network of over 100 lenders to secure competitive rates for investors and homebuyers alike. Praised for exceptional customer service, David has helped hundreds of families with a 97% satisfaction rate, guiding them to the mortgage they deserve.