Employment history for a mortgage helps a lender decide whether a client’s income is likely to continue. Match the evidence to their employment type, then apply the target lender’s rules to the income you use.
A new job, casual hours or a company car can change that calculation. The same payslip can produce different assessable income at different lenders.
How Lenders Read Different Employment Types
Permanent full-time and part-time employees usually start with recent payslips and evidence of their role and regular hours. Employment tenure still depends on the lender. Macquarie accepts six months in the current role or the same field or industry.
For casual clients, collect about twelve months of earnings history where available. Time with the same employer helps show continuity, but twelve months with that employer is not a universal minimum.
Macquarie allows six months in the role or industry. Firstmac requires six months with the current employer plus twelve months of continuous work in the same occupation and industry. Their income calculations also differ.
These requirements appear in Macquarie’s broker credit guidelines and Firstmac’s residential lending policy. Record the client’s actual commencement date and compare current earnings with the longer history.
For contract and freelance work, continuity matters more than the rate of pay, so use the contractor income guide for that file’s evidence.
Two years of tax returns and financial statements remain a common self-employed benchmark. Macquarie uses two years of returns, while ING accepts one year of financials for eligible borrowers.
Pepper Money’s alternative-documentation options include Business Activity Statements (BAS), subject to eligibility. Use the self-employed home loan guide for the full documentation routes.
Probation, Gaps and Recent Changes
A recent job change needs evidence of the income the client can actually receive. Distinguish a signed employment contract from a role they have commenced. Record the start date, first pay and any probation conditions.
Probation is lender-specific. Firstmac can consider it with twelve months of continuous employment in the same occupation and industry. Bankwest’s PAYG income flyer says probation is considered up to an 80% loan-to-value ratio (LVR).
Other policies can require probation to finish before settlement. Obtain the applicable policy for the client’s role and proposed LVR before promising an approval timetable.
Explain employment gaps briefly in writing. Give the duration, reason and evidence of the return to work. Study, travel, illness or caring responsibilities need an explanation that matches the client’s work history.
For overtime, bonuses and commission, prepare one to two years of payment history where available. If the lender averages variable income over that period, use its formula instead of the client’s best year.
History alone does not decide the accepted amount. Macquarie generally uses 80% of ongoing bonus or commission income. Firstmac can use 100% when it is a permanent income component supported by payslips and tax records.
Harder-to-verify income can still qualify, but the available interest rates or loan conditions can differ. Compare the evidence requirements alongside the cost and conditions of each suitable option.
Company Cars, Car Allowances and Salary Packaging
A company car can affect income or transport expenses, but its treatment comes from the lender’s policy. Identify the arrangement before entering a benefit in the calculator.
- An employer-provided vehicle is a non-cash benefit. Confirm whether personal use is permitted and which costs the employer pays.
- A cash car allowance is a payment on the payslip. Record its ongoing status and the client’s vehicle costs separately.
- A novated lease or salary-sacrifice arrangement has payroll deductions and lease commitments. Reconcile those amounts before adding anything back to income.
- A personally financed car creates a borrower liability. Include repayments and running costs under the lender’s rules.
A lender can recognise a stated benefit, adjust transport expenses or make no allowance. Follow its permitted treatment. Do not assume another lender’s car benefit applies.
Firstmac allows up to $5,000 a year added to gross income for a fully maintained company car with unrestricted personal use. Its policy requires employment terms and employer confirmation.
Macquarie accepts a permanent cash car allowance as income, with associated lease payments included as liabilities. A salary-packaging addback also needs the relevant loan commitment recorded.
Collect the employment contract, recent payslips, written employer confirmation and proof of who pays the running costs. The employer letter must identify personal-use restrictions and responsibility for fuel, registration, insurance and maintenance.
If the policy does not resolve the arrangement, ask lender credit which calculator fields to use and which expense adjustments are permitted. A reported fringe benefit does not automatically equal spendable income.
Company Car Double-Counting Example
This hypothetical arithmetic check uses monthly assessment amounts after any tax adjustment. Assume $6,000 income, $3,000 expenses and a $500 vehicle benefit covering transport already included in those expenses.
| Treatment | Income | Expenses | Surplus |
|---|---|---|---|
| Benefit recognised once through income | $6,500 | $3,000 | $3,500 |
| Benefit recognised once through expenses | $6,000 | $2,500 | $3,500 |
| Incorrect: benefit added and matching expense removed | $6,500 | $2,500 | $4,000 |
The incorrect entry overstates the monthly surplus by $500. The two correct rows illustrate alternative treatments, subject to lender policy. The $500 is an example, not a lender allowance.
Use the actual lender calculator for gross income, tax and expense benchmarks. Ask a registered tax agent about fringe benefits tax or the tax effects of salary packaging.
Preparing the File
Collect the income evidence before lodging the application. Check that each document supports the amount and employment history entered.
- Recent payslips showing the employer, current earnings and year-to-date totals.
- Employment letters stating the role, tenure and contract terms, including probation or benefits.
- Tax records supporting variable pay or business income.
- Full financial statements for self-employed clients, including profit and loss statements and balance sheets. Summaries can omit debts or expenses the assessor needs.
Reconcile payslips with salary credits and explain discrepancies. Employment verification for a home loan can include direct employer contact, so provide the correct contact details.
Expatriate and Non-Resident Borrowers
Foreign-income acceptance depends on residency, currency and country of employment. Some lenders exclude particular currencies or countries, and some do not accept overseas income at all.
Keep the lender’s permitted currency conversion and any income reduction with the file. The home loan eligibility guide covers the wider criteria for non-resident applicants.
A guarantor can provide additional security where the lender permits it, but that support does not prove the borrower can repay. Arrange independent legal advice for both borrower and guarantor before they commit.
The Rest of the Assessment
Credit history and living-expense declarations affect how a lender reads the same income. Check the credit history and reconcile declared spending with bank statements.
Verified income feeds the wider loan serviceability assessment, alongside expenses and liabilities. A reliable work history cannot compensate for a repayment shortfall.
Before lodging a non-standard income file, confirm in writing with the lender’s business development manager which documents will satisfy the assessor. Keep that confirmation with the calculation and supporting evidence.
