Working in the gig economy? How to get a mortgage

Jennifer Y. Ross
Published on October 23, 2019

Working in the gig economy? How to get a mortgage

For the self-employed, April 15 holds no particular significance, income is often erratic (killing it one month to eating ramen for dinner the next), nobody sends them W-2s at year’s end and their shoebox filing system contains zero paycheck stubs.

If you make a living by driving people around in your personal car, delivering restaurant food, grocery shopping for others, renting out rooms or an entire home to vacationers, delivering packages or freelancing online, you are self-employed.

You are an independent contractor in what is commonly known as the “gig economy.”

While the freedom these vocations offer is amazing, they do come with some drawbacks. One of those you’ll meet up with is when you try to get a mortgage to buy a home.

The mortgage challenge for the self-employed

One of the large real estate portals reported that self-employed workers:

  • Earn more than employees
  • Have more cash on hand
  • As a group, receive 40 percent fewer mortgage quotes than other homebuyers
  • Apply for homes that cost 12 percent more, on average, than other borrowers
  • Are “twice as likely as other borrowers to report a score of less than 680.”

While none of these factors either automatically qualify or disqualify gig economy workers hoping to get a mortgage, the low credit scores and lack of income documentation do present a challenge.

Deal with the credit score first

Regardless of how well you can document your income, a poor credit score will be your biggest obstacle in obtaining a mortgage.

The simplest way to raise your score is by paying your bills on time and by not applying for new credit. Then, consider the following:

  • Pay down your debt (on credit cards, personal loans, etc.)
  • Don’t close unused credit cards (they count in your favor)
  • Dispute inaccuracies on your credit reports
  • Keep credit card balances to 30 percent (or less) of your credit limit

Visit the Federal Trade Commission’s website to learn how to order your free credit report.

Gather up the necessary documentation

While your accountant may tolerate that shoebox full of records, your lender will not. Documentation requirements vary, but you’ll typically need to provide the lender with the following:

  • The past two years’ tax returns (with all schedules)
  • A profit and loss statement (yes, even gig economy workers will need to supply one). Wells Fargo and Chase offer fill-in PDF profit and loss statements online and Dummies.com offers one that you can download and print.
  • Bank statements (your lender will tell you how many are required. Submit all pages, including those that are blank).

These are the basic documents required; your lender may ask for additional information. Also, Fannie Mae guidelines are a bit different and you may be able to qualify with only the most recent tax return.

Additional considerations

Tax deductions are the holy grail for the self-employed because they reduce income and, thus, the amount of taxes owed.

This presents a conundrum when it is time to apply for a mortgage because the opposite is true: you want to show as high an income as possible.

If all else fails:

  • Put off buying a home for the next two years and, during that time, cut back on the number of business expenses you write off.
  • Save up a large down payment. This will lower the amount of the loan you’ll need to qualify for.
  • Consider purchasing a less expensive home that will be easier to qualify for.

Sen. Mark R. Warner (D-Va.), co-sponsor of the Self-Employed Mortgage Access Act, claims that “as many as 42 million Americans — roughly 30 percent of the workforce — are self-employed or in the gig economy,” according to the staff at Bankrate.com.

Thankfully, the mortgage industry is waking up to this fact and easing requirements for some loans.

By the way, we aren’t mortgage or tax experts and urge you to consult with yours if you have any questions.

Follow along on Social Media: facebook.com/JenniferYRossRealtor #FromNYCtoWestchesterLiving Facebook Group instagram.com/TheWestchesterLivingTeam


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Introduction to Jennifer Y. Ross & The Westchester Living Team at COMPASS

Jennifer comes from Platinum Drive to Compass as an experienced agent. She epitomized Platinum Drive Realty’s motto “I grew up here. I live here. I sell homes here” and she is known for providing each of her clients with an exceptional experience guided by her expert local knowledge. She works tirelessly to ensure each of her clients has a professional, enjoyable and successful Westchester community & home buying search or selling experience. She often remains very friendly with her clients and welcomes the opportunity to be an ongoing resource as they settle into Westchester Living. Every step she takes will embody her core principals; integrity can never be compromised, clients’ interests always come first and character, commitment, and passion truly matter. For her buyer clients, Jennifer looks forward to the opportunity of being “Your NYC to Westchester” guide and real estate broker. For her seller clients, Jennifer is proficient at implementing an aggressive marketing strategy in order to obtain the best price possible in a highly efficient and seamless manner. Jennifer thoroughly enjoys assisting buyer clients in navigating the landscape of the Westchester residential real estate market. She is skilled at enabling clients to define where they see opportunity & facilitating the process from initial search through closing. Jennifer was awarded the Platinum Drive Star Award for Outstanding Performance in Sales & Client Services in 2014 & Platinum Drive Realty’s Superstar Award for Excellence in Sales and Client Services 2015 & 2016 for her outstanding performance in sales and client service. In addition to her passion for local real estate, Jennifer has a firsthand understanding of home renovation and new construction. Upon moving from NYC to Scarsdale, she and her husband performed an extensive renovation on their first home. After completion, they moved onto their second project in Larchmont, a full house renovation and expansion. More recently she is active with local developers who specialize in new home construction, home expansions and renovations. Jennifer has the ability to understand a home’s full potential and can help clients find or create their dream home. Jennifer was the Manager of Platinum Drive Realty’s Larchmont Office. Jennifer was raised in Scarsdale. After graduating from Scarsdale High School, Jennifer received a BA in Child Study & Sociology from Tufts University and an MA in Language & Literacy from New York University. Jennifer currently lives in Larchmont with her husband, Michael, and their three sons, Braden, Devon & Zane. She specializes in communities in Southern Westchester with a concentrated focus on the Sound Shore Communities of Larchmont, Mamaroneck, Rye Neck, Rye, New Rochelle as well as her hometown of Scarsdale. Prior to real estate, Jennifer was a teacher in the Mamaroneck Public Schools. Jennifer has a deep understanding of the local school systems and the needs of young families.

Professional Associations & Accreditation

Jennifer is a Licensed Associate Real Estate Broker & has her Accredited Buyer Representative designation (ABR) and her Seller Representative Specialist designation (SRS).  Jennifer is a member of the Hudson Gateway Association of Realtors & the National Association of Realtors. Jennifer’s Website: westchesterliving.house Jennifer Facebook Page:  facebook.com/JenniferYRossRealtor Jennifer’s #FromNYCtoWestchesterLiving Facebook Group Jennifer’s Instagram: instagram.com/TheWestchesterLivingTeam

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