By Bill Lyons | Updated on October 7, 2024

The gig economy has changed the way Americans work — perhaps forever. There are 57.3 million freelancers operating in the United States, and this trend shows no signs of slowing down. In fact, by 2027, it’s anticipated that the majority of the American workforce will be freelance.

While the gig economy offers flexibility and unlimited earning potential, it also comes with unique challenges, especially when it comes to securing a mortgage. Being a first-time buyer is stressful enough, but traditional lenders often struggle to assess the financial stability of gig workers, freelancers, and 1099 contractors due to their non-traditional income streams.

But does that mean getting a loan for freelancers, gig drivers, and 1099 workers is impossible? Not necessarily. While qualifying for traditional lending may not be possible, there are other loans for gig workers available to choose from. So, don’t give up hope! Keep reading to learn how to get a mortgage loan as a gig worker.

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Why Is It Hard for Gig Workers to Get a Home Loan?

More and more people are relying on Uber, Lyft, Etsy, home-based businesses, Upwork and even OnlyFans for full time income. Compared to a 9-5 job, working as a self-employed, gig worker, or independent contractor offers not only flexibility, but unlimited earning potential.

But these self employed workers can face challenges when they want to qualify for mortgages. The reason? The industry’s mostly automated underwriting processes are geared towards borrowers with steady paychecks who receive annual W-2 statements. Most mortgage lenders impose stricter rules for self-employed borrowers than for those who work for someone else.

Loans for gig drivers, freelancers, and anyone else considered self-employed often require specialized approaches. Traditional lenders may struggle to accurately assess the financial stability and income consistency of gig workers, leading to higher interest rates, larger down payment requirements, or even loan denials.

Best Mortgage Options for Gig Workers

For freelancers, 1099 employees, and gig workers, traditional mortgage options can be challenging. Fortunately, there are specialized loans for freelancers and 1099 workers. These loans are designed to accommodate non-traditional income streams. Here are a few gig-worker loans to consider when getting a mortgage:

Bank statement loans

Bank statement loans have taken over the non-traditional stated income loans of the past as a new alternative for borrowers who are unable to verify their income in the traditional way by providing the previous two years tax returns, W2s and pay stubs. These are non-QM loans, non-traditional loans or expanded criteria loans that allow other forms of documentation to prove the ability to repay. Additionally, there are fixed or adjustable rate options available, and you may even have the option for an interest-only mortgage.

That’s right! Just as it sounds, a bank statement loan allows the borrower to verify his or her income with as little as 12 months of bank statements. Griffin Funding’s gig worker loans don’t exclude income from job titles such as online creators, social media influencers, YouTubers, podcast hosts, MLM distributors, and the like.

Want to know how much you might be able to borrow with a bank statement loan? Try our bank statement loan calculator.

Asset-based loans

Asset-based loans are another avenue for gig workers to secure a mortgage. These loans consider your liquid assets as a form of income, providing an alternative path to homeownership for those with significant savings or investments. You can use assets such as savings accounts, stocks, bonds, and other liquid investments to qualify.

These loans are ideal for gig workers with substantial assets but irregular income. They can also be a good option for retirees or those transitioning to gig work.

Qualifying for a Mortgage as a Gig Worker

When underwriting a home loan for 1099 workers, lenders consider several factors. Understanding these metrics can help you better prepare for the mortgage application process:

• Proof of income (whether via bank statements or proof of assets): Providing income can be challenging for gig workers. However, lenders may accept bank statements, asset documentation showing liquid assets, and contracts or invoices for freelancers with consistent clients.
• DTI ratio: Regardless of your employment status, lenders prefer a DTI of 43% or lower, though some may accept higher ratios for strong applications. Lower DTI ratios generally lead to better loan terms.
• Down payment amount: The required down payment can vary based on the loan type and your financial profile. For example, conventional loans may require 10-20% down for gig workers, while bank statement loans require a down payment of 10%, depending on your credit score.
• Amount of time you’ve been self-employed: Lenders often want to see a track record of consistent income. Most prefer at least two years of self-employment history. However, some loans for gig workers may allow for as little as one year of self-employment. That said, longer self-employment can strengthen your application.
• Credit score: Credit score is just as important for self-employed mortgages as it is for conventional mortgages. Aim for a score of 620 or higher. The higher your credit score, the better your terms and interest rate will be.

How to Get a Home Loan as a Gig Worker

Getting a mortgage as a gig worker may seem tough at first, but it doesn’t have to be. Griffin Funding specializes in working with self-employed individuals just like you to help you finance your dream home. Here’s how our process works:

1. Talk to us: Contact us to chat with one of our loan specialists. You’ll discuss your financial situation, goals, and we’ll help you find the best loan options for gig workers.
2. Pre-approval: Provide us with your basic financial information and receive a pre-approval letter outlining your potential terms and loan amount.
3. Application submission: Once you’ve found a home you love and your offer is accepted by the seller, complete our user-friendly online application. Upload the required documents, such as bank statements or proof of assets.
4. Underwriting process: Our team will review your application and documentation. We may request additional information if needed.
5. Loan approval: Once you’re approved, you’ll receive your official loan approval. You’ll review and accept the terms of your mortgage.
6. Closing: Schedule your closing date to sign the final documents and get the keys to your new home.

At Griffin Funding, we understand the unique challenges gig workers face. Our process is designed to be flexible and accommodating, ensuring that your non-traditional income doesn’t stand in the way of your homeownership dreams.

Explore Your Mortgage Options Today

When it comes to getting a loan as a gig worker, the main hurdle is finding the right lender to work with. Griffin Funding is one of the best mortgage lenders for 1099 employees, gig workers, and more. Our team specializes in non-QM loans that provide a path to homeownership for gig workers, freelancers, and self-employed individuals. If you have questions about this type of loan program or want to see if you qualify, contact us today or apply now to get started.

Bill Lyons

Bill Lyons is the Founder, CEO & President of Griffin Funding. Founded in 2013, Griffin Funding is a national boutique mortgage lender focusing on delivering 5-star service to its clients. Mr. Lyons has 22 years of experience in the mortgage business. Lyons is seen as an industry leader and expert in real estate finance. Lyons has been featured in Forbes, Inc., Wall Street Journal, HousingWire, and more. As a member of the Mortgage Bankers Association, Lyons is able to keep up with important changes in the industry to deliver the most value to Griffin's clients. Under Lyons' leadership, Griffin Funding has made the Inc. 5000 fastest-growing companies list five times in its 10 years in business.