Home Loan Options for Gig Workers

NEW YORK — As I chat with my Lyft drivers, the conversation often turns toward rent: It's too high. A lot of drivers want to stop renting. They wonder if there's a way to buy a home.

It's possible to get a mortgage when you earn money in the digital gig economy as a rideshare driver or food deliverer. You might get a different type of loan than your neighbor who draws a steady paycheck from a company. You'll provide different financial documentation, too.

Doing gig work doesn't lock you out of qualifying for a mortgage so long as you have good credit, sufficient savings and job stability.

Digital gig work is small but growing

Estimates vary on how many people do digital gig work. One plausible calculation comes from a Bank of America Institute survey in September 2024. It said that 3.8% of Bank of America deposit customers received gig income from digital platforms.

The details: 1.4% of account holders earned money through social commerce on platforms like TikTok and Instagram, 1.3% were rideshare drivers, 0.9% were food deliverers, and 0.2% got income from vacation rentals.

Mortgage lenders expect growing numbers of digital gig workers to apply for loans in coming years, according to a survey conducted by mortgage securitizer Fannie Mae in October 2024.

Why these income sources are hard to use

The Fannie Mae report said lenders find it hard to approve mortgages for workers who collect digital gig income. Here's why:

Most home buyers get plain-vanilla, "qualified" mortgages that conform to standards set by the Consumer Financial Protection Bureau. To oversimplify, qualified loans assume that you draw a paycheck as a W-2 employee.

Digital gig work is different. It's a form of self-employment. The digital platform sends an IRS 1099 form to document your income. You file your tax return using Schedule C, which allows you to deduct business-related expenses.

Schedule C is where things go sideways: With qualified mortgages, lenders consider only your net profit or loss. "We can only use the income that they've claimed on their tax returns for qualifying purposes," says Ronald Cofone, sales manager for Affinity Federal Credit Union, in Bayville, New Jersey.

The problem is that the net profit listed on your tax return is usually less than your real profit. So the lender doesn't get an accurate picture of how much you really make.

Enter the non-qualified mortgage

Another type of loan, the non-qualified mortgage, uses alternative documentation of income. Instead of demanding your tax returns, a non-qualified (or non-QM) lender asks for bank statements or 1099 forms.

The lender's goal is to measure your cash flow "to document that ability to repay," says Tom Hutchens, president of Angel Oak Mortgage Solutions, a prominent non-QM lender, based in Atlanta.

Non-QM loans are legit. The lenders examine your ability to afford the monthly payments. The main differences: Non-QM loans often require bigger down payments than qualified mortgages. They typically have slightly higher interest rates. And they use bank statements and 1099 forms instead of tax returns.

"What's powerful about non-QM is that we have solutions that are creative for gig workers, for example, that don't fit the traditional box," says Larry Maitlin, director of national non-agency lending for Luxury Mortgage, Stamford, Connecticut.

Non-QM lenders look for stability

Non-QM lenders prefer consistency over on-again, off-again work, Hutchens says. "It does get tricky if someone works for a month and then has income, and then doesn't for a couple more months, and then comes back for a month."

Gig work seldom is a worker's primary source of income. Depending on the non-QM lender, that might or might not be a problem. Some, like Luxury Mortgage, focus on borrowers who derive all or most of their income from self-employment. Some, like Angel Oak, frequently deal with situations in which gig work is a side hustle to a borrower's main job, or one spouse is self-employed and the other spouse works for a company.

Applying for a non-QM loan as a gig worker

Your bank probably doesn't dabble in non-QM lending. The simplest way to find a non-QM lender is to work with a mortgage broker who "can evaluate their situation and then try and find the best lender and the best product for that borrower," Hutchens says.

Ideally, your mortgage application will show at least two years of steady gig work, documented with 1099s. One year may be sufficient, but two years is better. The lender will want a year-to-date profit-and-loss statement "that shows that they're on track to make the same kind of money as last year," Maitlin says.

In most cases, you'll submit bank statements.

You can make things easier for the lender by setting up a separate bank account for your gig activity, preferably from the start. This is especially the case if the gig work supplements your primary job.

Some final advice

You need decent credit to qualify for a non-QM loan. You'll strike out if you have a lot of late payments on your credit report.

As with any mortgage application, you'll need to document that you've been paying your rent on time. Pay your rent with a check, Venmo or Zelle so you'll have a paper trail.

Following these guidelines, you might be able to qualify for a mortgage using your gig income — and escape that rent that's too high.

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