Qualifying income is the portion of your income a lender will actually count when calculating DTI. Salaried W-2 income is straightforward. Self-employed income, commission, bonus, and overtime require averaging — typically over the last 2 years — and proof of continuity.
For self-employed borrowers, qualifying income is the net income on your tax returns plus add-backs (depreciation, depletion, business use of home). This often understates real cash flow, which is why bank-statement loans and other Non-QM products exist.
Variable income (commission, bonus, rental) usually needs 2 years of history showing continuity. If you just started a new commission role or have a new rental property, talk to a loan officer about timing — sometimes waiting a few months until the second year of history helps significantly.