Source‐scaling relations are an integral component of probabilistic seismic‐hazard analysis (PSHA). These models that enable finite‐rupture dimensions to be computed for a given earthquake scenario provide the link between magnitude–frequency distributions and ground‐motion models. However, the development of scaling relations has not traditionally been undertaken in a manner that is consistent with their application within the hazard analysis. The causative problem is that rupture widths saturate as a result of the limited seismogenic thickness in any given region. This saturation has not previously been dealt with in a consistent manner, either in the development of scaling relations or in their typical application. This article approaches the development of source‐scaling relations for shallow crustal earthquakes in active regions in an entirely new way that results in models that are physically consistent and consistent with the assumptions of PSHA. The innovative treatment of the width saturation issue results in new models that feature nonlinear scaling of the expected values, as well as strongly heteroskedastic variances. The first set of correlation coefficients is also provided for the rupture dimensions so that their joint variability can be appropriately accounted for within PSHA. The findings of the article have significant implications for hazard analysis, as the conditional distribution of finite‐rupture distances for a given magnitude differs quite markedly from those suggested by existing approaches.