Even before the pandemic, gig work, self-employment and full-time freelancing were booming. However, since March 2020, so many people have left traditional employment that a new phrase was coined for it – the Great Resignation.
Millennials – those born from 1981 to 1996 (so ages 25 to 41) – have embraced this new type of work. They came of age in an era of tech-enabled companies staffed by independent contractors – Uber, Lyft, DoorDash, InstaCart and Etsy being among them. This generation is also flexible enough to quickly adapt to remote-work models and to feel comfortable with freelancing arrangements.
However, the shift has created challenges for mortgage borrowers and the mortgage industry, where many of the largest players have been slow to adapt to changes in how workers now make their living.
Making a living as a gig worker or independent contractor offers many advantages – flexibility, being one’s own boss, and diversifying income streams. But when it comes time to qualify for a mortgage, these self-employed workers can face challenges. The industry’s typically automated underwriting processes are geared toward borrowers with steady paychecks and annual W-2 statements. Most mortgage lenders impose stricter rules for self-employed borrowers than for those who have employers.
That’s because conventional lenders often require self-employed borrowers to show a two-year history of financial statements. An applicant who has been self-employed for less than two years may not qualify for financing programs with Fannie Mae and Freddie Mac.
Even business owners with long tenures can find themselves blocked out of conventional financing. That’s because of the way conventional lenders analyze tax returns. Self-employed taxpayers are wise to take full advantage of the many tax deductions and write-offs allowed by the IRS. Although maximizing the expenses on the tax return lowers the tax bill, the practice can make it tougher to qualify for a mortgage.
What complicates matters even more is that the rules for self-employed applicants can vary depending on lender or loan type.
The good news? Millennial gig workers who don’t qualify for conventional loans can qualify for non-QM loans. LendSure is well aware of the challenges self-employed borrowers face. We offer many non-QM loan programs that are specifically dedicated to this new wave of homebuyers, whose income is generated from non-conventional work rather than the more traditional 9-to-5 job.
Some of the programs LendSure features are:
- 12- and 24-Month Bank Statement Loans
- Just-Missed Agency (Alt-A)
- Property Investor Loans – Full Doc, Bank Statement, DSCR (Investor Cash Flow) Loan options
- Non-warrantable condo loans
- Asset Depletion / Qualifier
LendSure’s non-QM model is built on saying “yes” to borrowers, who otherwise would hear no. Credit-worthy, non-conventional borrowers will get to enjoy loan programs built with their needs in mind, as well as commonsense underwriting, minimized hassle, and top-notch LendSure customer service. We don’t blindly adhere to the inflexible underwriting guidelines that conventional lenders are required to follow.
With so much of today’s workforce taking a chance on themselves, there’s an opportunity to win untapped clients by offering out-of the-box solutions such as LendSure’s non-QM mortgages. Build your business by offering non-QM loans to self-employed workers who don’t qualify for agency loans.