Definition
Variable income is non-guaranteed income that fluctuates from period to period: sales commissions, tips, performance bonuses, overtime, seasonal employment income. Unlike fixed salaries, it cannot be guaranteed in advance by the employer.
For a mortgage lender, variable income is admissible under conditions:
- **2-year average**: lenders calculate the average of your variable income over the last 2 fiscal years (via T4s and tax return). If income is increasing, the average is conservative. If income is decreasing, the lender may use the most recent year's figure. - **Required tenure**: most lenders require 2 years of seniority in the same job or sector to count variable income. - **Supporting documents**: most recent T4(s), 2 CRA Notices of Assessment, and sometimes a letter from the employer confirming compensation structure.
Tipped workers (servers, drivers, etc.) and commission-based salespeople often have their files undervalued by standard lenders — an AMF broker can identify the most accommodating lenders for this profile.