Income History Requirements in Lending Assessment

Canonical question

How much income history do lenders require to recognise an income source, and what circumstances shorten or lengthen the required history?

Jurisdiction: Australia

Domain: Credit assessment — income verification and history

Applies to: All lending types where servicing depends on income stability

Decision definition

Income is generally recognised only where lenders can verify:

the income exists (evidence)
the income is stable (history)
the income is likely to continue (continuity)

History requirements vary by income type and risk sensitivity. A strong current income level can still be reduced or excluded if history is insufficient or inconsistent.

Typical history expectations by income type

Base PAYG income

Often relies on:

current payslips + employment confirmation
additional history where role is new or probationary

Variable PAYG income (OT/bonus/commission)

Often requires:

6–24 months history depending on volatility
consistent receipt patterns
employer confirmation where relied upon

Rental income

Often requires:

lease evidence + statements / rental ledger
tax return history for established properties
conservative treatment for newly acquired properties

Self-employed income

Commonly:

2 full financial years (sometimes more conservative for volatility)
interim support may help but rarely replaces lodged history in strict policies

Government benefits

Requires:

evidence of ongoing entitlement
alignment between benefit duration and loan expectations

Factors that increase required history

income volatility
multiple income sources with irregular patterns
recent industry change
reliance on incentives/bonuses
short-term contracts
lender policy sensitivity and tiering

Factors that may reduce required history

strong employer and stable role
long tenure in the same industry
low LVR and strong mitigants
high surplus after buffers
conservative loan size relative to capacity

Reduced history is usually still paired with more conservative recognition.

Evidence and verification

Income history is assessed using:

payslips + YTD consistency
PAYG income statement / group certificate equivalent
bank credits where required
tax returns and financials for business income
leases, rental ledgers, property statements for rental income

Where history cannot be shown, lenders often treat income as:

partial, conditional, or excluded.

How lender policy can differ

While the structural role of income history is consistent across lending, individual lenders apply different tolerance thresholds and evidence expectations.

Common areas of variance include:

Minimum history duration

Required months or years of income evidence vary by lender and income type.
Some policies allow shorter history where stability signals are strong.

Use of interim or partial history

Certain lenders may consider recent improvement supported by evidence.
Others rely strictly on completed historical periods such as full financial years.

Treatment of variable or irregular income

Different averaging periods and volatility tolerances apply.
Some lenders exclude recent variability entirely until longer history is shown.

Interaction with mitigants

Lower LVRs, strong surplus income, or conservative loan sizing
may allow reduced history in some policies but not others.

Because of these differences, similar borrowers can face different recognition outcomes based on lender interpretation rather than income level alone.

Information Structur* uses to position income history

To interpret how history requirements apply within an individual scenario,

Structur evaluates several structural inputs.

These include:

Income type and volatility

PAYG, variable PAYG, rental, self-employed, or benefit income
degree of fluctuation across time

Length and continuity of history

months or years of verified income
presence of gaps, changes, or recent commencements

Evidence completeness

availability of payslips, tax returns, BAS, leases, or confirmations
consistency between documented income and declared income

Risk context

loan size relative to income
LVR, buffers, and other mitigants influencing policy tolerance

These inputs allow structural positioning without relying on lender comparison or product selection.

How Structur interprets income history

After evaluating income history signals, borrower positioning typically falls into one of four states:

History sufficient

Income has adequate verified duration for recognition.

History usable with adjustment

Income recognised conservatively due to shorter or variable history.

History conditionally usable

Recognition depends on additional time, evidence, or mitigants.

History currently insufficient

Income excluded until longer or more stable history is established.

Structur then highlights:

the primary limitation affecting recognition
the single change most likely to improve usability
the next canonical questions relevant to the scenario

This provides structural clarity before any credit assistance is sought.

Structured borrower mapping

Applying this assessment logic

History requirements change materially based on income type, volatility, and timing.

Structur helps you map your scenario so you can see what history might be required before seeking credit assistance.

→ Map your situation in Structur

Canonical status: Canonical status: Mechanical reference within the Income Recognition cluster

Role in lending assessment: Determines whether an income source is eligible for recognition

Next canonical question: Income continuity evidence

*Structur is a structured scenario-mapping environment that allows exploration of how lending assessment mechanics may apply within an individual borrower position.

It provides general structural insight only and does not provide credit advice or product recommendations.