Australian Lending Policy Reference

Probation, Contract, and Casual Income Policy

How employment status — including probation periods, fixed-term contracts, and casual arrangements — affects whether income is recognised, and to what extent, in a mortgage assessment.

Vetted and updated: 2026ACL 387460 Vetted

Core Assessment Analysis

Canonical Question

Australia

Credit assessment — employment status sensitivity

Residential and asset finance; also relevant where PAYG supports commercial facilities

Decision Definition

Employment status affects two policy questions:

will the income keep flowing?

are earnings stable enough to rely on?

Probation, contracts, and casual employment increase both risks. Lenders respond by:

requiring more history

requiring employer confirmation

reducing recognition via shading/averaging

limiting lender pathways

delaying applications until conditions are met

Probation Income

Key policy tests:

probation completed vs ongoing

time in industry and role type

employer type and stability

income consistency since commencement

Outcomes often include:

full inclusion with strong mitigants (policy dependent)

conditional inclusion

deferral until probation ends

Fixed-Term Contract Income

Key tests:

contract length remaining

renewal history and likelihood

industry demand and role continuity

evidence of ongoing pipeline (where considered)

Short remaining term commonly triggers:

conditional recognition

requirement for renewal letter

exclusion if end date is too near settlement

Casual Employment Income

Key tests:

length of casual history

stability of hours and gross earnings

pattern of income across seasons

reliance on overtime/penalties

Casual income is often:

averaged

shaded

treated more conservatively where hours are irregular

Structured Borrower Mapping

Applying This Assessment Logic

Employment status sensitivity is heavily timing-dependent.

helps you map start dates, probation end dates, contract terms, and income pattern so you can see how policy may apply .

Foundational reference

Determines whether PAYG income is treated as ongoing or conditional

Unstable income decline conditions

Why Underwriters Focus Here

Income continuity is a core component of serviceability assessment. Lenders need to be satisfied that the income they are recognising will continue for the foreseeable future — not just at the time of application. Probationary, contract, and casual arrangements each create uncertainty about whether the income will persist, which is why lenders require more evidence and may shade or defer recognition until conditions are met.

Key Outcome Assessment Factors

Whether probation has been completed, the length of contract remaining, whether a renewal is likely (and evidenced), the stability of hours and pay for casual employees, the industry and employer type, and the length of time in the current and prior roles. Outcomes vary by lender — some have more conservative probation policies than others.

Your pathway from here

1 — Understand

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General Information Only

This content is general educational information only. It does not constitute credit advice, financial advice, legal advice, or a recommendation of any specific credit product or lender. Lending policies vary between lenders and change over time. Always seek advice from a licensed mortgage professional for your specific circumstances.

Model Mortgages Pty Ltd | Australian Credit Licence 387460