What overtime income counts towards a home loan?
Most lenders count overtime, but rarely all of it. Many shade regular overtime to around 80 per cent of what you actually earn, while some take it in full for essential services and site-based roles. Which lender assesses your overtime, and how consistent it looks on paper, decides how much of it works for you.
Overtime is where a lot of WA borrowing power lives. Base salaries in mining, construction, health and emergency services are solid, but it is the overtime that turns a good income into a strong one, and it is also the part of your payslip that lenders treat with the most suspicion. Two lenders can look at the same twelve months of overtime and count completely different amounts of it.
Why do lenders treat overtime differently from base salary?
Base salary is contractual, so lenders take it at face value. Overtime depends on rosters, projects and staffing, so lenders treat it as income that could shrink. Most manage that risk by counting only a portion of it, and each lender sets that portion differently. That is the whole reason the answer varies so much.
From a lender’s point of view, your base salary will still be there if your site goes quiet for six months. Your overtime might not be. Credit policy deals with that uncertainty bluntly: rather than assessing your actual rostered arrangements, most lenders apply a standard discount, called shading, to variable income like overtime, bonuses and commissions.
The frustration for workers is that plenty of overtime is not really variable at all. a FIFO worker on an even-time roster with rostered overtime built into every swing earns it as reliably as salary, and some lenders recognise this while others do not. The policy gap between the lenders who understand rostered overtime and the ones who treat all overtime as a lottery win is where a broker earns their keep.
How much of your overtime will a lender actually count?
It ranges from all of it to none of it. a common position is around 80 per cent of your overtime averaged over recent payslips, some lenders count 100 per cent for certain industries and roles, and a small number cap or exclude overtime entirely. Which lender assesses you decides the number.
The differences are not small. on an income with $40,000 a year of overtime, the gap between a lender counting 100 per cent and a lender counting 80 per cent can move borrowing capacity by tens of thousands of dollars, which in a Pilbara market can be the difference between the house you want and the one you settle for.
This is also why comparing lenders on rate alone misleads people with overtime-heavy incomes. The sharpest rate in the market is worthless if that lender’s servicing calculator shades your overtime so hard the loan does not fit. for overtime-heavy incomes, the lender’s income policy routinely matters more to the outcome than the advertised rate.
One lender takes your overtime in full. The next takes two thirds. Same payslips, different loan.
What evidence do lenders want before counting overtime?
Recent payslips showing year-to-date figures, usually backed by a longer history. most lenders want to see overtime over at least three to six months, and many prefer a full year or two years so they can average it, plus your PAYG summaries or tax returns to confirm the pattern holds.
The evidence question is really a consistency question. A lender is trying to satisfy itself that the overtime on your last three payslips is normal, not a one-off shutdown blitz that flattered your year-to-date. The cleaner the pattern, the easier the conversation.
A few things help the paperwork tell the right story:
- Year-to-date figures on payslips. These let a lender average your overtime without chasing more documents. Payslips that break out base, overtime and allowances separately assess faster and better.
- An employment letter for rostered overtime. where overtime is a built-in feature of the roster, a letter from the employer confirming it is regular and expected to continue can lift how a lender treats it.
- Timing the application. If your year-to-date has been dragged around by leave or a quiet quarter, the same income can assess very differently a few payslips later.
Which workers get their overtime counted in full?
many lenders count 100 per cent of overtime for essential services workers such as nurses, paramedics, police, firefighters and some corrections roles, because the overtime is treated as a permanent feature of the job. Outside those lists, full counting exists but is lender by lender and role by role.
The essential services carve-out is the best known example of a wider truth: lenders keep lists of industries and roles where they trust the overtime. some lenders extend full or near-full overtime treatment to mining and resources workers, particularly where the overtime is rostered rather than ad hoc, and this is exactly the kind of policy detail that never appears on a comparison site.
If your income is FIFO or site-based, overtime is only one part of how your pay is assessed. Site allowances, LAFHA and the structure of your roster all move the number too, and we have covered the whole picture in our guide on how FIFO income is assessed.
What about shutdown, seasonal or irregular overtime?
Lumpy overtime is the hardest to count. lenders generally average irregular overtime over a longer period, often the full financial year, and shade it harder than rostered overtime. Shutdown workers with big peaks and quiet months need a lender that averages generously, and those lenders exist.
WA’s shutdown season economy runs on exactly this kind of income: intense blocks of long days, then gaps. Assessed month by month it looks chaotic. Assessed across a year it is often remarkably stable, because the shutdown calendar repeats. The lender you want is the one whose policy looks at the year, not the month.
The same logic applies to casual workers stacking hours, and to anyone whose overtime follows a project cycle. The pattern matters more than the label on the payslip, and presenting the pattern clearly is most of the battle.
How do you get the most from your overtime?
Match the lender to the income before applying. Keep your payslip history clean and continuous, get rostered overtime confirmed in writing where you can, and have a broker check how each shortlist lender’s calculator treats your specific mix of base, overtime and allowances before anything is submitted.
The order of operations matters as much here as it does with postcode policy: the wrong lender first means a declined application on your file and weeks lost, usually through no fault of your income. The right lender first means your overtime does what it should have done all along, which is count.
If your pay is built on rosters, site work or shift loading, this is bread and butter for us. Our FIFO home loans page covers how we work with site-based incomes, and the conversation about your specific payslips takes about twenty minutes.
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Start with a chatThis guide is general information for the Australian market, not advice about your situation. Lender credit policy changes, and what applies to you depends on your circumstances. Pilbara Finance is a credit representative (478535) of Mortgage Specialists Pty Ltd, Australian Credit Licence 387025.