How Income Is Assessed (PAYG, Bonus & Overtime)

Income is assessed for reliability, not just amount

Lenders do not assess income based solely on what is earned today.

Income is assessed based on stability, history, and likelihood of continuation, using policy rules designed to reduce reliance on variable or uncertain earnings.

This explains why two borrowers with the same gross income can receive very different lending outcomes.

This page explains how lenders assess income, and why not all income is treated equally.

What lenders are testing

When assessing income, lenders are testing whether it is:

  • Ongoing and sustainable
  • Predictable over time
  • Supported by evidence
  • Consistent with employment type and industry

Income that meets these criteria is more likely to be fully recognised.

PAYG base income

Base PAYG income is generally the most favourably treated income type.

Lenders typically require:

  • Current payslips
  • Employment confirmation
  • Evidence of continuity

Permanent full-time income is usually assessed at or close to 100%, subject to policy.

Bonus, overtime & allowances

Variable income is assessed more conservatively.

Most lenders require:

  • A demonstrated history (often 6–24 months)
  • Consistency over time
  • Employer confirmation that it is ongoing

Depending on policy, variable income may be:

  • Averaged over time
  • Partially recognised
  • Excluded entirely

This is why total income and assessed income often differ.

Casual and contract income

Casual and contract income is assessed based on:

  • Length of employment
  • Industry stability
  • Consistency of earnings

Short tenure or irregular income may reduce the portion recognised.

Why assessed income differs from actual income

Differences arise due to:

  • Income shading
  • Averaging periods
  • Policy caps
  • Employment risk profiles

These adjustments are designed to reduce reliance on income that may not persist.

How income assessment fits into the broader framework

Income assessment directly affects:

  • Borrowing capacity
  • Serviceability outcomes
  • Policy eligibility

It interacts with expense benchmarks, buffers, and liabilities.

See: Borrowing Capacity: Why It Caps Out

See: Assessment Pillars

How to use this information

This explainer helps you understand:

  • Why some income is discounted
  • Why lenders request history
  • Why outcomes differ between lenders

It does not determine eligibility or provide advice.

Related assessment explainers

  • Self-employed income basics
  • Serviceability buffers
  • Borrowing capacity: why it caps out

Important information

General information only. No personal advice is provided.

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