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Texas Jumbo Loan on Commission Pay: A Dallas Guide

Q: Why do lenders scrutinize commission income so closely for Texas jumbo loans?

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: What is the minimum employment history required to qualify for a jumbo loan using 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 typically calculate qualifying income from commissions?

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: What happens if my commission income has recently declined?

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 key documents are needed to verify commission income for a mortgage?

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: How do unreimbursed business expenses affect jumbo loan qualification?

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: Are there special jumbo loan programs that are more flexible for commission earners?

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.

March 4, 2026

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

Published By

David Ghazaryan

Owner / Broker / Banker

Contact Me At

(702) 766-3744

NMLS 1486726

Let's Connect

TL;DR

Commission is Variable: Lenders consider commission income less stable than a fixed salary, which leads to a more in-depth review process and stricter documentation requirements for jumbo loans.
Two-Year History is Standard: To establish a reliable income pattern, most lenders in Texas require a minimum two-year track record of receiving consistent or increasing commission earnings.
Business Expenses Reduce Income: Any unreimbursed business expenses documented on your tax returns will be subtracted from your gross income, which can lower your final loan qualification amount.

Why Lenders Scrutinize Commission for Texas Jumbo Loans

For high-earning sales professionals in competitive Texas markets like Dallas and Plano, a compensation structure heavily weighted toward commission is common. While it allows for significant earning potential, it presents a unique challenge when applying for a jumbo loan. Unlike a predictable bi-weekly salary, commission income is inherently variable. Lenders, especially in the jumbo space where loans exceed conforming limits and carry more risk, prioritize stability and predictability above all else.

A jumbo loan underwriter’s primary goal is to verify that your income is likely to continue for at least the next three years. A fixed salary provides that confidence easily. Commission, however, can fluctuate with market conditions, sales cycles, and personal performance. An underwriter sees a low base salary and high, variable commissions as a potential risk that must be thoroughly mitigated through extensive documentation and analysis. They need to build a case that your historical earnings create a reliable pattern, ensuring you can comfortably handle a large mortgage payment long-term. This is why the qualification process for commission-based borrowers is far more in-depth than for salaried W-2 employees.

Establishing a Track Record: Commission History Requirements in Dallas

To build a convincing case for income stability, lenders require a documented history of your earnings. For jumbo loans in the Dallas-Fort Worth metroplex, the industry standard is a minimum of two years of commission income history. This two-year look-back period allows underwriters to identify a trend, smooth out seasonal peaks and valleys, and establish a dependable average.

Ideally, this history should be with the same employer or, at the very least, within the same industry and role. For example, if you were a top medical device salesperson in Plano for 18 months and recently moved to a competitor in Dallas in the same role with a similar commission structure, a lender may consider that a continuous history. However, switching from selling software to selling luxury real estate would reset the clock, and you would likely need to build a new two-year track record in your new field before qualifying for a jumbo loan.

This two-year rule is rarely flexible in the jumbo mortgage world. (The data, information, or policy mentioned here may vary over time.) A shorter history, even with exceptionally high earnings, is often a non-starter because it doesn’t provide enough data for the lender to confidently project future income stability.

Income Calculation: The 12-Month vs. 24-Month Average

The most common method lenders use to calculate qualifying income from commissions is a 24-month average. This approach provides the most conservative and stable income figure, which is paramount for high-value jumbo loans.

Here’s how it works:

The lender gathers your commission earnings from the past 24 months.
They sum the total amount.
They divide that total by 24 to arrive at your qualifying monthly income.

Example:

Year 1 Total Commission: $180,000
Year 2 Total Commission: $220,000
Total 2-Year Commission: $400,000
Calculation: $400,000 / 24 months = $16,667 per month in qualifying income

Calculating commission income for a jumbo loan

Some borrowers ask if a 12-month average is possible, especially if their most recent year was significantly better. While some conventional loan programs might allow this, it is highly uncommon for jumbo loans. (The data, information, or policy mentioned here may vary over time.) A lender might only consider a 12-month average if you have a very long history (5+ years) of consistently increasing commission income and a strong overall financial profile. For most applicants in Dallas, planning for a 24-month average is the safest and most realistic approach.

What If My Commission Income Recently Declined?

A year-over-year decline in commission income is one of the most significant red flags for a mortgage underwriter. It immediately undermines the core requirement of income stability. If your earnings have decreased, lenders will adjust their calculation to be even more conservative.

Typically, the lender will calculate your income two ways and use the lower of the two figures:

The 24-month average.
The most recent 12-month average (or year-to-date income extrapolated over 12 months).

Example of Declining Income:

Year 1 Total Commission: $250,000
Year 2 Total Commission: $190,000
24-Month Average Calculation: ($250,000 + $190,000) / 24 = $18,333/month
Most Recent 12-Month Income: $190,000 / 12 = $15,833/month

In this scenario, the underwriter will use $15,833 as your qualifying monthly income, not the higher 24-month average. If the decline is substantial (e.g., more than 20%), you may need to provide a detailed Letter of Explanation (LOE). A good LOE provides a compelling and verifiable reason for the dip, such as a one-time market disruption, a change in commission structure that has since stabilized, or a temporary leave. Without a strong explanation, a significant decline could jeopardize your loan approval.

Essential Documentation to Prove Income Stability

Organization is key to a smooth underwriting process. You must provide a complete and clear picture of your earnings. Be prepared to submit the following documents:

Two Years of Full Personal Federal Tax Returns: This includes all schedules (like Schedule A if you itemize). Lenders need to see the full return, not just a summary.
Two Years of W-2 Statements: This corroborates the income reported on your tax returns.
Recent Pay Stubs: You will need your most recent pay stubs covering a 30-day period. These must clearly show the breakdown of your base salary, commission, bonuses, and any other earnings, as well as year-to-date totals.
Signed Verification of Employment (VOE): Your lender will send a form directly to your employer's HR department to complete. This form validates your start date, position, and pay structure, and provides a breakdown of your earnings for the past two years plus the current year-to-date.

A beautiful home in Plano, Texas purchased with a jumbo loan

Gathering these documents proactively will demonstrate that you are a serious and well-prepared borrower, helping to streamline your jumbo loan application in a fast-moving market like Plano.

The Role of an Employer Letter in Your Plano Jumbo Loan Application

Beyond the standard VOE, a well-crafted letter from your employer can be a powerful tool to support your application. This is not a standard requirement, but it can provide valuable context that numbers alone cannot. This is particularly helpful if your income stream is complex or has shown some variability.

An effective employer letter should:

Be written on official company letterhead and signed by a direct supervisor or HR manager.
Confirm your position, tenure, and value to the company.
Explain your commission structure in clear terms.
Provide a positive outlook on your future earnings, perhaps mentioning a strong sales pipeline, new product launches, or market expansion.
Affirm the stability of your position and the company's financial health.

For an underwriter reviewing a large loan for a property in Plano, this letter adds a layer of human-backed confidence. It helps them conclude that your high performance is not a fluke but a sustainable pattern.

How Unreimbursed Business Expenses Impact Your Qualification

This is a critical and often-overlooked factor for commission-based salespeople. Even though the Tax Cuts and Jobs Act of 2017 eliminated the federal tax deduction for most W-2 employee business expenses, mortgage lenders are required to analyze your provided tax returns and subtract any unreimbursed expenses (historically found on Form 2106) directly from your gross qualifying income.

Example of Expense Impact:

Calculated Qualifying Income: $16,667/month (from our earlier example)
Unreimbursed Expenses on Last Year's Tax Return: $15,000
Monthly Expense Impact: $15,000 / 12 = $1,250/month
Final Qualifying Income: $16,667 - $1,250 = $15,417/month

This $1,250 monthly reduction can significantly alter your debt-to-income (DTI) ratio, potentially lowering the loan amount you qualify for. It is crucial to be aware of how these past deductions will be treated and to discuss this with your mortgage advisor early in the process.

Are There Special Jumbo Loan Programs for Commission Earners?

Yes, but you often have to look beyond the big national banks to find them. While most lenders follow strict underwriting guidelines, some offer more flexible portfolio loans. A portfolio loan is a mortgage that the lending institution keeps on its own books instead of selling it on the secondary market. This gives them greater discretion over the approval criteria.

A portfolio lender in the Fort Worth or Dallas area might:

Be willing to consider a 12-month income average with a strong rationale.
Accept a shorter employment history if you have a guaranteed contract or are a top performer recruited from a competitor.
Offer more flexible DTI ratio limits. (The data, information, or policy mentioned here may vary over time.)

These programs are not advertised widely and are typically accessed through experienced mortgage brokers who have established relationships with a network of niche lenders. For a high-earning professional on commission, partnering with an expert who understands these specialized jumbo loan products can be the difference between approval and denial.

Understanding how your commission income translates into qualifying power is the first step. If you're ready to move forward with a home purchase in Texas, our mortgage advisors are experts in complex income scenarios. Apply now to get a clear, confidential assessment of your jumbo loan options.

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.