Sign-On Bonus, Relocation and Annual Bonus: What Counts as Mortgage Income? (2026)

Quick answer (updated October 2026): Bonus income counts for a mortgage when you can show a history of receiving it. Fannie Mae recommends two years but accepts no less than 12 months with offsetting factors, and lenders average it. One-time sign-on bonuses and relocation packages generally aren't qualifying income, though once deposited they can help as assets for your down payment or reserves.

Bonuses are a big part of pay for many readers: engineers at Houston energy companies, consultants at Big Four firms, bankers in Jersey City, physicians with productivity pay, tech workers with a 15% annual target. When the bonus is a third of your income, whether a lender counts it can change your price range by six figures.

The rules are more specific than "bring two years of W-2s." This guide explains what Fannie Mae's current guide says about bonus history, how lenders calculate it, what happens when bonuses drop, and why sign-on and relocation money get handled differently.

How lenders count bonus income for a mortgage

Fannie Mae's Selling Guide B3-3.3-02, Bonus, Commission, Overtime, and Tip Income (03/04/2026), sets the framework:

• History: "A minimum two-year history is recommended." Income received for a shorter period, but no less than 12 months, may be acceptable if positive factors reasonably offset the shorter history.

• Calculation (stable or increasing): the lender averages year-to-date and prior-year earnings over the months covered, and the calculation must include at least 12 months of income. Annual bonuses are annualized (divided by 12).

• Documentation: a completed Request for Verification of Employment (Form 1005), or your most recent paystub and two years of W-2s, plus a verbal VOE.

• Continuance: the lender doesn't need to verify it unless there's reason to believe the bonus won't continue.

That last point matters. Some loan officers ask for an employer letter "guaranteeing" next year's bonus. That isn't an agency requirement, and most employers won't write one.

Bonus history of 2 years vs 12 months

Two years is the comfortable case. Between 12 and 24 months, the lender needs positive factors, which could be things like a stable employer, a bonus written into your compensation plan, or a consistent pattern. Under 12 months, the bonus generally can't be used. If you've had one bonus cycle, wait for the second.

Worked example: annual bonus averaging

Hypothetical: Meera, an analyst at a Houston energy company, earns $110,000 base ($9,167 a month). Her annual bonus pays every March: $16,000 in 2025 and $18,000 in 2026.

Item	Amount
Base monthly income	$9,167
Bonus, two-year average ($16,000 + $18,000) ÷ 24	$1,417
Total qualifying monthly income	$10,583
Debt capacity at an illustrative 43% DTI, base only	~$3,942
Debt capacity at 43% DTI, with bonus	~$4,551
Extra monthly capacity from bonus	~$608
Extra loan that $608 of P&I supports at 7.40% (30-yr)	~$87,800

Rate shown is the Freddie Mac weekly average, Oct 15, 2026; illustration only, not a quote or offer. The 43% ratio is illustrative; actual limits depend on the loan program and DU findings. Loan figure excludes taxes and insurance.

Counting that bonus can move Meera's price range by roughly $90,000. That's why documentation matters.

When your bonus goes down

Declining bonuses are where files get stuck. The bonus section doesn't have its own rule, so Fannie Mae's general rule for decreasing income applies: the lender must confirm the income has stabilized after the decline. If it hasn't, the income isn't eligible. If it has, the lender uses the income since stabilization.

Hypothetical: if Meera's bonus fell from $18,000 to $9,000, a lender wouldn't average the two. It would want to understand whether $9,000 is the new normal, and may use the lower figure or exclude the bonus entirely. A documented, non-recurring event outside your control (for example, a company-wide pay cut in one year) may allow the lender to exclude that period, but that's a judgment call.

Sign-on bonus and your mortgage

A sign-on bonus is a one-time payment. It doesn't meet the "documented history of receipt" and "reasonably expected to continue" tests in Fannie Mae's general income rules, so lenders generally won't count it as qualifying income.

What a sign-on bonus can do:

• Once it's paid and in your bank account, it's an asset: usable for the down payment, closing costs or reserves.

• The deposit will be visible on your statements. On a purchase, any single deposit over 50% of your monthly qualifying income must be sourced; a paystub or employer letter showing the bonus usually answers it. See large deposit sourcing rules.

Two caveats. Many sign-on bonuses have a clawback if you leave within a set period; a lender may ask about it, and you should be realistic about whether it's truly your money yet. And sign-on RSUs are not eligible as income under Fannie Mae's RSU rule (B3-3.3-07). Vested shares from a sign-on grant can still be sold and used as an asset; see selling RSUs for a down payment.

Talk to a loan officer who's seen this before: Variable pay is where one lender says no and another says yes. We'll run your bonus history the way underwriters will and show what it does to your price range. Book a free income analysis.

Relocation package and your mortgage

Relocation money comes in many forms: lump sums, reimbursed expenses, temporary housing, home-sale assistance. For qualifying income, it generally doesn't count; it isn't recurring pay.

It can still help:

Relocation component	Qualifying income?	How it can help your mortgage
Lump-sum relocation payment	No	Asset once deposited, for down payment, closing costs or reserves
Reimbursed moving expenses	No	Preserves your savings
Employer home-buying assistance program	No	Fannie Mae allows employer assistance (grant or certain loans) for down payment and closing costs on a primary residence, if it's an established company program
Temporary housing	No	Buys time to close without renting twice

Employer assistance under Fannie Mae's B3-4.3-08 must come directly from the employer (or an employer-affiliated credit union), and the lender documents the program terms and the amount. If you're closing before your start date, see our guide to a mortgage with an offer letter; under its Option 2, only fixed base income counts, so bonus targets in your offer won't help qualify.

Quick reference: what counts as income

Pay type	Counts as qualifying income?	Typical requirement
Base salary	Yes	Paystub, W-2s, VOE
Annual or quarterly bonus	Yes, with history	12–24 months history; averaged
Overtime and commission	Yes, with history	Same section, same averaging
Sign-on cash bonus	Generally no	Can be an asset once received
Sign-on RSUs	No	Excluded by B3-3.3-07
Time-based RSUs	Yes, if rules met	Vested and distributed, public stock, 12 months with employer; see RSU income and mortgage qualification
Relocation package	No	Can be an asset

What the rules actually say

• Fannie Mae Selling Guide B3-3.3-02, Bonus, Commission, Overtime, and Tip Income (03/04/2026): two-year history recommended; no less than 12 months acceptable with offsetting factors; average YTD and prior-year earnings including at least 12 months; annual bonuses annualized; Form 1005 or paystub plus two years of W-2s, plus verbal VOE.

• Fannie Mae Selling Guide B3-3.1-01, General Income Information (10/07/2026): income must be stable, have a documented history of receipt and be reasonably expected to continue; declining income must have stabilized.

• Fannie Mae Selling Guide B3-3.3-07 (10/07/2026): sign-on RSUs aren't eligible income. B3-4.3-08, Employer Assistance: established employer programs may fund down payment and closing costs on a primary residence (as of October 2026).

Frequently Asked Questions

Q: How many years of bonus history do I need for a mortgage?
A: Fannie Mae recommends two years. A history of at least 12 months may be accepted if there are positive factors that offset the shorter track record. With less than 12 months of bonus receipt, lenders generally won't count it. Individual lenders may require the full two years as an overlay.

Q: Does a sign-on bonus count as income for a mortgage?
A: Generally no. It's a one-time payment without a history of receipt or expectation it will continue. Once paid and deposited, it can be used as an asset for your down payment, closing costs or reserves, with documentation showing where it came from.

Q: How do lenders calculate bonus income?
A: They average year-to-date and prior-year earnings, using at least 12 months of income. For an annual bonus, they typically divide the yearly amount by 12 and average across years. If the bonus has declined, they look for stabilization and may use the lower amount.

Q: Can I use my relocation package for a down payment?
A: Yes, once the money is in your account. A lump-sum relocation payment can fund your down payment or closing costs, but it doesn't count as qualifying income. Some employers also offer home-buying assistance programs that Fannie Mae allows when they're established company programs.

Q: What if my bonus was lower this year?
A: The lender will want to see that your income has stabilized. It may use the lower figure, exclude the bonus, or, if the drop was a documented one-time event outside your control, exclude that period. Bring your compensation plan and any explanation to your loan officer early.

Get a free bonus and variable income analysis

Send us your last two years of W-2s, a recent paystub and your bonus history. We'll calculate qualifying income the way an underwriter would, show how much bonus changes your price range, and match you with lenders whose overlays fit your pay structure. We shop 150+ wholesale lenders and see variable-pay files every week. Book a free 15-minute call at /contact, start your application at /apply, or call 713-366-4668.

Masala Loans is a brand of Matador Lending, LLC (NMLS #2072896). Written by Apurva Sanghavi, President, NMLS #227127. Equal Housing Opportunity. This article is general education, not tax, legal or immigration advice — consult a qualified CPA, attorney or immigration lawyer for your situation. Program availability, rates and terms vary by lender and borrower and are subject to change; not a commitment to lend.