Written by:
Jayson Hardie – Chief Executive Officer- (636) 256-5712
It’s hard to say exactly when the “generation gap” will catch up with me, or if it already has and I’m in denial. I mean, I know what a “gig” is, but I still find myself pausing when slang makes the jump into professional, everyday language.
And yet, here we are.
Today, we’re talking about how to get a mortgage when you earn your living through gig work. Or, more traditionally put, when you’re self-employed.
While getting a mortgage when you’re self-employed may sound complicated, the reality is much simpler: it just takes the right preparation.
What “Gig” Work Means for Your Mortgage
The “gig economy” is just a modern way of describing work that isn’t tied to a traditional 9-to-5 job. Instead of working for one employer and receiving a steady paycheck, people earn income through contract work, freelance projects, or running their own business. That can look like anything from driving for a rideshare service to owning a salon or working as a consultant. The common thread is flexibility and the fact that income is often paid through 1099s rather than a W-2.
From a mortgage standpoint, all of this is categorized the same way: self-employed income.
Can You Get a Mortgage If You’re Self-Employed?
Yes, absolutely.
Self-employed borrowers qualify for mortgages every day. The process just looks a little different than it does for someone with a steady paycheck and a W-2.
Because income can vary, lenders tend to look a little closer at:
- Credit history
- Cash reserves
- Income consistency
But if you’re organized and prepared, the experience can be just as smooth as for someone employed in a more traditional sense.
How Lenders Verify Your Income
This is the most important piece of the puzzle when you’re self-employed.
In most cases, lenders will want to see two years of tax returns to establish that your income is stable and consistent. Unlike a traditional borrower with a steady paycheck, your income has to be evaluated over time.
There are a few key things to keep in mind:
- You need to report the income you want lenders to use
- Write-offs can lower your qualifying income
- Consistency matters more than having one particularly strong year
When Exceptions Apply
There are a few situations where flexibility exists:
- If you moved from a W-2 job into a similar self-employed role
- If you’ve been self-employed for more than 5 years, you may qualify with one year of returns
Why Documentation Matters More Than Ever
After the 2008 financial crisis, new regulations introduced the concept of “ability to repay.” In simple terms, this means lenders HAVE TO verify your income. No exceptions.
That means:
- No more stated income loans
- Everything must be documented
This is often where self-employed borrowers run into trouble.
Many people try to reduce their taxable income to save on taxes, but when it’s time to apply for a mortgage, that strategy can work against you.
If your income doesn’t have a paper trail, lenders can’t use it.
Mortgage Options for Self-Employed Borrowers
If your tax returns don’t fully reflect your income, there are still options.
Bank Statement Loans
Some programs allow you to qualify using bank deposits instead of tax returns.
These loans:
- Review 12–24 months of deposits
- Estimate income based on cash flow
- Help borrowers who have significant write-offs
At Homestead Financial Mortgage, we help determine when this route makes sense and when a traditional loan is the better fit.
It’s Not Just About Income
Programs like bank statement loans can help solve for income, but that’s only one piece of the overall picture.
Lenders are also going to look at your credit score and credit history to understand how you’ve managed debt over time. Your debt-to-income ratio (DTI) shows how your monthly obligations compare to your income, and your loan-to-value ratio (LTV), based on your down payment, helps determine the overall risk of the loan.
All of these factors work together to give a more complete view of your financial profile. Even if one area isn’t perfect, strength in another can help balance things out.
How to Set Yourself Up for Success
If you’re planning to buy a home, a little organization now can make a big difference later. The clearer your financial picture is, the easier the process will be when it’s time to apply.
Start by keeping your business and personal finances separate. Using dedicated accounts makes your income and expenses much easier to track and much easier for a lender to verify. The same idea applies to larger purchases. If you buy something for your business, like a vehicle, it’s best to pay for it through your business account so it doesn’t impact your personal debt when qualifying for a mortgage.
It’s also a good idea to separate your credit cards. Having one for business and one for personal use helps keep everything clean and organized, which ultimately makes the underwriting process smoother for everyone involved.
Final Thoughts
Being self-employed doesn’t disqualify you from buying a home; it just means you need to approach the process a little differently. With the right preparation and the right guidance from a lender who has experience helping people in this “gig economy”, you can get there just like any other buyer.
At Homestead Financial Mortgage, we’re here to help you navigate that path and make the process as straightforward as possible. If you’re looking to explore your options, reach out to our team of expert loan officers today.
