Mortgage Application: Is There Hope for Gig-Economy Workers?

On-going mortgage discussionLinkedIn research shows that 43% of the U.S. working population will be part of the gig economy by 2020. A Pew Research Center study reveals that 44 million American workers are either self-employed or working for the independent.

Freelancers have become a significant chunk of the workforce in the country. However, they don’t share the home-loan privileges their 9-to-5 peers enjoy. Any mortgage lender in Utah like Altius Mortgage Group can’t deny that issuing a loan to a gig-economy worker is a high-risk proposition.

If you want to use your gig-economy income to buy a house, increase your chances of mortgage application approval by doing the following:

Show Two Years’ Worth of Income History

Like regular home-loan applicants, you ought to prove that you have 24 months of a steady stream of income. This can be challenging, especially if you don’t earn the same amount of money every month. Also, tax deductions can make your net income significantly lower, which can affect your probability to default on the loan.

Fortunately, mortgage lenders are starting to go great lengths to validate gig-economy earnings. Explain the nature of your work and provide any document, formal or informal, to help strengthen your income claim. Plus, it will help if you can maintain a full-time job on top of your freelancing endeavors.

Pay an Extra Large Down Payment

The most effective way to compensate for unverifiable income is a substantial down payment. Instantly, your prospective lender has to absorb less risk when you pay a larger percentage of the property’s cost upfront. If you put down an extraordinarily large sum, you might get away showing only 12 months’ of income history.

Make Your Coffers Swell

To help your prospective lender feel a bit more optimistic, you might need to have substantial cash reserves. Showing that you have a considerable amount of liquid assets untouched for several months makes it easier to make the other party say yes.

Maintain a Stellar Credit Score

Most importantly, erase any doubt that you’re creditworthy. A combination of abundant cash reserves and a sterling credit score can impress even the most skeptic lender.

There’s no denying that it’s tough to qualify for a mortgage as a gig-economy worker, but it’s more attainable than many people say. You might be at a disadvantage, but you can gain borrowing rights if you use your time smartly.