10Xsales

Enterprise Sales

Mortgage using OTE (vs. just base salary)

Hi All - I'm looking to get pre-approved for a home mortgage. A couple of major banks I've worked with both refuse to take into account my OTE salary when looking at my income (and my offer letter) and instead are just using my base salary as my income.

They say if I have records of receiving my bonus for the past 2 years then they can use the full OTE amount. I've only been in this role for 2 months; my prior roles did not have a commission/bonus component.

Any tips on lenders out there who look at full OTE? Any tips on how to navigate around this?

Thank you!

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30 comments

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TennisandSales

Politicker

Head Of Sales

yeah this is standard practice now. i dont think you will get around it. also, do you really want to get around it?

NotCreativeEnough

Big Shot

Professional Day Ruiner

^^ this. Never plan your budget off of commission. Always budget based off of your base salary. If you can't still eat and pay your bills if you have a bad month with 0 commission you're going to be stressed more than its worth.

Sunbunny31

Politicker

Sr Sales Executive 🐰

I don't think he's saying he'd use the full OTE for the mortgage. It's just a factor in a lender's decision whether or not you qualify for a mortgage and can affect the % you're able to pin down. The higher the salary, the lower the risk, and the more attractive you are to a lender. If you budget properly, the commission part of the OTE doesn't even get involved in the payment.

I've been through this. It factors into refinancing as well.

CuriousFox

WR Officer

🦊

👀🍿

Sunbunny31

Politicker

Sr Sales Executive 🐰

Considering current economic conditions, it will be a while before I even think of refinancing, but I’ve done it multiple times. :)

SoccerandSales

Big Shot

Account Executive

This. You probably don't want to be budgeted based off of 100% of your OTE even if you are confident you will hit.

braintank

Politicker

Enterprise Account Executive

They’re doing you a favor. Live off your base…

Wellss

Tycoon

Channel sales

I have to agree with this! As we've all witnessed over the past couple years, things can change so fast and commission is never guaranteed so it's always a good idea in my head to live off of what is guaranteed

UserNotFound

Politicker

Account Executive

I’m not a lender, but I’m under the impression this is a compliance issue- if you find a lender willing to use OTE as your “income” when measuring DTI, I’d run far far away.

ChunkyButters

Tycoon

Exactly my thoughts....sounds like a lender looking to write shady loans to unqualified people. And we all know how that worked out in the past.

The only reason I wanted to use my OTE was for a better rate. In all my modeling, I only factored in my base for the payment I could afford. I just wanted to use any extra source of income to prove I was overqualified for the amount, and get the best rate available.

Pachacuti

Politicker

They call me Daddy, Sales Daddy

yah, most want to see actual pay stubs. Good luck with the OTE.

Kosta_Konfucius

Politicker

Sales Rep

Prior year W2s and paystubs over the past months, but since this is your first OTE role 2 months in it might be hard to do that.

10Xsales

Valued Contributor

Enterprise Sales

Agreed. I've been in this role for 2 months. 2 years before that I was in graduate school. And the job I had before that (for 3.5 years) the comp was different as I was promoted (some based on MBOs, 1 year 50/50 base/commission), 1 year full base).

Bummer since the company I've joined has been hitting quota each quarter for the last 8 quarters and the quota is team based, not individual.

antiASKHOLE

Tycoon

Bravado's Resident Asshole

OTE is not a guaranteed amount of income. Banks like money, and they also like keeping money and loaning wisely.

NotCreativeEnough

Big Shot

Professional Day Ruiner

no lender will work with full OTE at only 2 months in. You can find some that may be lenient on the 2 year rule and at like 1.5 years be able to use it. But OTE is meaningless to them if you haven't proved you're able to perform well enough to actually hit that number.

Sunbunny31

Politicker

Sr Sales Executive 🐰

This is true. Unfortunately, OP, you're far too new at the job for them to use anything but your guaranteed income for this.

JustGonnaSendIt

Politicker

Burn Towns, Get Money

DANGERZONE

Others have mentioned this... but don't seek to qualify for a loan using your OTE. Especially just two months in to the new role.

If you've been in a role for a while and your W2 is relatively stable or moving upward over ~3 years, it's easier to do. But still not recommended.

Sorry if this crashes your dreams on the house buy. But it's tough love to help you ultimately win in the future. Either adjust your budget or take some time to stack up more down-payment to reduce the DTI.

The vast majority of sales people I know are basically slaves to work because they've financed their lives based on getting commission checks. Panicking every time a deal slips and that commission check will come one month later.

Do yourself a favor and avoid this at the get-go. Live on your base and use the commission as gravy to pay cash for toys (or bank up stacks). You will live a happier life at work and at home without the stress of NEEDING that commission check to pay your bills.

jefe

Arsonist

🍁

You can use tax slips to show your income over the last 2 years, but they're going to give your base the most weight.

It's just the way it is, and should be, especially after 2 months.

I was doing basically the same thing a few months ago.

Justatitle

Big Shot

Account Executive

However unfair it may be there’s silver linings to it. From someone that went through this same thing 4 years ago when I bought, if you are able to have someone co-sign for you that is the easiest. If not, then you can also see if there is an option to put more down it you have those funds. Sorry that such is the case

SADNES5

Politicker

down voters are marketing spies

As someone who worked in Finance - DO NOT get a mortgage based on your OTE.
There is a reason why banks want 2+ years of confirmation for cashflow.

Hit the numbers first before getting that dream house. Start with what you can afford. Pls.

dreadpiratescript

Politicker

Producer

Just an unfortunate situation, i just went through this and they required pay stubs even though i have closed sales that will be way more but wont show up in pay for another 2 months. sales people just have it tough here, everyone else has the same career risks but somehow we are the only group that is a "see it when we believe it" when it comes to lending

ChunkyButters

Tycoon

Any lender or financial advisor worth their salt will tell you to only go off your base.Commission is too variable to rely on it for your fixed living expenses. It's just a bad practice, and will only cause you unneeded stress, or a potential default if you don't hit your number.

Live off your base. Use commish to pad savings, investments, take vacations, or make fun purchases.

MoneyMan

Fire Starter

Cool A$$ Ex Banker

Former business banker here 👋

First off, I wouldn’t use OTE to qualify for a mortgage. The second you have a rocky year, the mortgae and expenses will kick your ass, so just prequalify off base salary. That’s what they’re gonna use anyways until you prove income with 2 years W2, OTE included.

Secondly, if it’s a debt to income issue, you could (although it’s frowned upon) get a few business lines of credit to move over some consumer debt that you may have, like credit cards and loans. Most business credit is completely hidden from your personal credit profile which will help DTI, but you’re still responsible for the payments on the business side. Just be sure not to tell them you’re using business credit to pay off personal debt.

Lastly, if you’re really desperate, you could use bank statement mortgages. They will still need to see 12 months of consistent deposits, with a 680 minimum FICO score. Some may ask for 24 months of statements. Interest rates will be shit, though so I wouldn’t go this route.

Pro tip: I would get a decent cheaper, starter home in an area that is currently being gentrified and ride the equity wave. Ima few years do a cash out refi, rent it out as a LTR or STR, and use a portion of the equity proceeds to get the home you really want. By then you’ll have 2 solid years of W2s with a ton of liquidity. Just my .02

thetrumanshow

VP of Sales

I also used to be a banker. This is all great advice or alternatively you could do a DSCR loan (debt service coverage ratio) which uses the amount that the home would rent for as income but again live within your means or the best advice I could give is wait. Check out futures on the 10 year treasury. Everybody is expecting the market to cool down late Q4 and into Q1 & Q2... you have to think that a year ago a 600k home with a 2.5% rate is about the payment you get today on a 300k home with a 7% rate.

JDialz

Politicker

Chief Operating Officer

Yeah this is standard practice in my experience. We’re commission-only so I have always had to provide historical earning records and full tax returns.

Salesisfun

Opinionated

It's always going to be an average of the last two years for better or for worse

deathbysales

Politicker

Vice President, Sales

Yeah that was an issue for me initially but I worked with my company for 10+ years and they looked at every w2 for 10 years and saw I was never under a certain $ amount.

BourbonKing

Valued Contributor

VP of Sales

They are looking out for you. Don't overextend yourself 2 months into a new job. Just look at all the posts in the War Room about people crying over what they were told was their OTE and what they are actually earning.

activity

Politicker

VP, Business Development

Yeah, it is what it is until you can prove what commissions you will have. Especially if you didn't receive commission prior to this role since they will see that as more of a risk than anything.

Business Development Manager

I dont believe there is anyway to get around this. Most banks are 2+ years of stubs w/ Commish, some are even more.

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10Xsales

Mortgage using OTE (vs. just base salary)

30 comments

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