What Counts as Income for Mortgage Lenders?
How lenders assess salary, bonus, RSUs, carried interest, and partnership drawings — why your total compensation and your assessed income are rarely
the same number, and what that means for how much you can borrow.
DIRECTOR AND MORTGAGE ADVISER
Specialist mortgage broker for City professionals. 10+ years structuring mortgages around complex income.
In short
Basic salary is counted at 100% by every lender. Everything else — bonus, restricted stock units (RSUs), partnership drawings, carried interest, contractor day rates, foreign currency income — varies by lender, sometimes dramatically.
The same total compensation can produce assessed incomes that differ significantly depending on which lender is used and how the application is packaged.
Lenders also run a stress-tested affordability calculation alongside the income multiple, and for City professionals with school fees, tax reserves, and existing commitments, that calculation is often the binding constraint on borrowing — not the income figure itself.
Who this is for
Your income is more than a basic salary — bonus, RSUs, profit share, partnership drawings, contractor day rates, or foreign currency pay make up a significant part of your total compensation. You're trying to understand how a lender will assess it, why the figure you've been offered may be lower than you expected, and whether a different approach would produce a better outcome.
This article covers each income type in turn, explains where lenders typically apply discounts or exclusions, and shows how the stress-tested affordability calculation interacts with the income assessment.
Why your total earnings and your assessed income are different numbers
You earn well. You'll probably be fine. But the gap between what you earn and what a lender will count — and at what percentage — is one of the least understood parts of the mortgage process for City professionals, and one of the most commercially significant.
Lenders assess income in two ways simultaneously. First, they apply an income multiple — a cap on how many times your assessed annual income they'll advance. Second, they run a stress-tested affordability calculation, modelling monthly net income against committed outgoings and a stressed mortgage payment. Both tests produce a borrowing ceiling; the lower of the two is what you're offered. For most high earners, it's the affordability calculation that limits the figure — not the income multiple.
The income multiple matters because of what goes into it. A lender that uses 50% of your annual bonus and another that uses 100% can produce assessed incomes that differ by six figures on the same application — without any change to the underlying earnings. That gap flows directly into borrowing capacity. Understanding how each income component is treated, and which lenders treat it most favourably, is the work that produces that difference.
Basic salary: the one constant
Basic salary — PAYE, contracted, paid monthly — is taken at 100% by every mainstream lender without exception. It's the one universal in the income assessment. Three months' payslips and the latest P60 are the standard evidence requirement.
The complications arise for those whose basic salary is modest relative to their total compensation — investment bankers where base is £120k but bonus is £200k, lawyers where drawings are structured with a low fixed component and a large variable profit share, tech professionals where the majority of their package is in RSUs. In each case, the basic salary is counted in full but the components that make up the bulk of total earnings face a different assessment.
Bonus income: where lender variation is most significant
Bonus is the income type where the gap between lenders is largest and most commercially consequential. For a senior City professional with a £200k annual bonus, the difference between a lender that uses 50% and one that uses 100% is £100k of assessed income — which at five times translates to £500k of additional borrowing capacity on an identical application.
Most mainstream lenders use the lower of the latest bonus year and a two-year average. Beyond that, the methodology diverges. Some cap the proportion of bonus they'll include regardless of consistency. Others will use a higher percentage — up to 100% — where the bonus is regular, well-documented, and clearly structured as a recurring part of compensation rather than a purely discretionary payment.
Timing matters too. An application submitted in February, the month after a large year-end bonus lands and is evidenced on payslips, looks very different to the same application submitted in November when the most recent bonus is eleven months old. For most clients with a significant annual bonus, the right moment to apply is one of the first things we work through.
For the full detail on bonus income strategy: Can I Use My Bonus for a Mortgage? →
RSUs, carried interest, and the income types most lenders won't touch
For many City professionals — particularly in private equity, technology, and investment banking — the income types that make up the largest share of total compensation are precisely the ones mainstream lenders handle least well.
RSUs are real, taxable income. They appear on payslips and P60s. But many mainstream lenders have no policy route for including vested RSU income in an affordability assessment. A minority of lenders have developed explicit criteria for vested RSU income where there's a consistent vesting history; private banks take a broader view and will often fold RSU income into a holistic compensation picture.
Carried interest is excluded by virtually all mainstream lenders. The assessment model used for employed and self-employed income simply doesn't accommodate distributions that are irregular, deferred, and contingent on fund performance. A private equity (PE) professional with base salary of £150k and carry distributions of £500k in a good year will typically be assessed by mainstream lenders on the £150k alone. Private banks are the practical route for clients in this position.
LLP and partnership income: why self-employed treatment applies even to senior partners
One of the most common surprises for equity partners and newly promoted LLP members is that lenders treat them as self-employed — regardless of how regular, predictable, or substantial their drawings are. The moment you're a partner in an LLP, you're self-employed in a lender's assessment model.
The practical consequence is that most lenders require two years of tax calculations (SA302) and the accompanying Tax Year Overviews. For a solicitor who made equity partner eighteen months ago, that wait is a genuine constraint. Some lenders have a documented route for newly promoted partners: a signed partnership deed, a letter from the firm's finance director or managing partner confirming the drawings structure, and an accountant's reference.
The income calculation itself varies. Most lenders use the lower of the latest year and the two-year average. For a partner whose income has grown steadily, the two-year average will understate current earnings. In our experience, knowing which lenders will use the latest year alone, and which partners' profiles those lenders will accept that approach for, is where the difference in borrowing sits.
For the full picture on how LLP income is assessed and what newly promoted partners can do: LLP Partner Mortgages: The Complete Guide →
How the affordability calculation interacts with your assessed income
Knowing what income a lender will count is only half the picture. What they do with it — how they run the stress-tested affordability calculation — determines the final borrowing figure.
Lenders don't test affordability at the rate you'll actually pay. They model it at a higher theoretical rate — typically one to three percentage points above the product rate — to stress-test whether you could still service the mortgage if rates rose. At higher loan sizes, the stressed monthly payment is substantial, and the affordability calculation can produce a ceiling lower than the income multiple alone would suggest.
Outgoings compound this. School fees are taken as a committed monthly outgoing at their full invoiced value — two children in private education at £18,000–£25,000 a year each is £3,000–£4,000 per month deducted before the mortgage payment is considered. Existing credit commitments, car finance, pension contributions, and for the self-employed, regular tax reserve transfers — all of these reduce the income available to service the mortgage in the lender's model.
Documentation: why how you present income matters as much as what you earn
A lender that will include RSU income in principle will still decline an application where the vesting schedule is absent or the P60 trail is unclear. Income that isn't properly documented is treated the same as income that doesn't exist.
For bonus income, the starting point is two to three years of payslips and P60s clearly showing the bonus component. A letter from the employer confirming the bonus structure — whether it's contractual or discretionary, how it's calculated, whether it's expected to continue — isn't always required but consistently strengthens the case.
For LLP and partnership income, tax calculations (SA302) and the accompanying Tax Year Overviews are the standard route. Some lenders will also accept an accountant's reference alongside or in place of the SA302 — particularly relevant for newly promoted partners.
For RSU and contractor income, the documentation bar is higher: a vesting schedule or current contract is the minimum, but lenders will typically also want evidence of receipt — payslips or bank statements showing the vested income or contractor payments as they arrive.
When the mainstream panel reaches its limit
Most cases — even complex ones — land with a mainstream lender. But for a specific subset of City professionals, the mainstream assessment model produces a figure that doesn't reflect their real financial position.
The clearest signal that the mainstream panel has reached its limit: a significant proportion of total compensation is in categories that mainstream lenders categorically exclude — carried interest, very large RSU grants, or certain types of foreign currency income. A second signal: the loan size is above £2m, at which point most mainstream lenders' LTI caps become a hard ceiling regardless of the affordability calculation.
Private banks operate a different model — looking at total compensation, net worth, and long-term financial profile rather than applying formulaic income multiples. The income that mainstream lenders exclude often forms part of the picture they assess holistically. The trade-off is cost: private bank rates are typically higher, and some require assets under management as part of the relationship.
See our guide to how lenders assess complex and multi-source income →
FAQs
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Basic salary always counts in full. Everything else — bonus, RSUs, carried interest, LLP drawings, contractor day rates, foreign currency pay — is subject to the lender's assessment methodology, which varies significantly. The gap between what you earn and what a lender will count is often the most important number in the mortgage process.
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Some will, where bonus is regular, well-documented, and structured as a consistent part of compensation rather than purely discretionary. Others cap inclusion at 50%, or use the lower of the latest year and a two-year average. The same bonus history can produce very different assessed income figures at different lenders.
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For most mainstream lenders, no. Vested RSU income appears on payslips and P60s but many lenders have no assessment route for including it. A minority do — with specific evidence requirements. Private banks typically include RSU income as part of a holistic compensation assessment.
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As self-employed, regardless of how regular your drawings are. Most lenders require two years of tax calculations (SA302). Some will accept a signed partnership deed and accountant's letter for newly promoted partners — useful where a full two-year partner history doesn't exist yet.
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The most common reasons for City professionals: variable income was assessed conservatively or excluded, committed outgoings such as school fees reduced the affordable monthly payment significantly, or the affordability stress test produced a lower ceiling than the income multiple alone would suggest. A different lender, different income presentation, or different mortgage structure can each move that figure.
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Yes, materially. Interest-only or part-and-part structures reduce the stressed monthly payment in the affordability model, which can increase the borrowing ceiling. At higher loan sizes, this is often the most effective lever available once income assessment has been optimised. See Interest-Only Mortgages for High Earners →
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When a significant proportion of total compensation is in categories mainstream lenders exclude — carried interest, large RSU grants, certain foreign currency income — or when the loan size exceeds £2m and mainstream LTI caps become the hard limit. Private banks assess holistically, at the cost of higher rates and sometimes an AUM relationship requirement.
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Often yes — particularly where variable income was involved and you're not sure how it was assessed. A decision in principle from one lender is one view of one profile on one day, not a market ceiling. The right question to ask your broker is: which income was used, at what percentage, and was more than one lender considered?
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