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Millions of gig economy workers might be after their piece of the American dream — and you can help.
Did you know that, in 2023, around 59 million laborers across the U.S. were classified as independent workers? That’s roughly 36% of the entire U.S. workforce!
These dedicated professionals are members of the gig economy. And just like their permanent worker counterparts (roughly 100 million Americans), many are likely working towards their portion of the American dream — homeownership.
But while the gig economy is booming, mortgage processes haven’t always kept pace. That’s where you come in!
These clients will need a knowledgeable mortgage professional to guide them through the process — understanding their unique struggles, providing them with valuable financial education, and offering up that priceless emotional support.
So, let’s explore exactly how the mortgage industry is addressing the gig economy, and how you can help.
Understanding the Gig Economy
First things first, let’s get clear on some definitions.
The gig economy refers to the portion of the labor market supported by contract or freelance workers.
Some members of the gig economy work through apps or websites that connect them with clients, like rideshare or food delivery platforms. Others might work in catering, food service, or bartending. Still more might take on writing, design, or software development work.
These individuals might also be called freelancers or self-employed.
Applying for a Mortgage as a Member of the Gig Economy
Some gig workers have struggled in securing home loans. That’s because borrowing is typically easier for W-2 applicants, so members of the gig economy will have a few more hoops to jump through.
For example, many gig workers have irregular income. They don’t have a standard salary paid out on a monthly or bimonthly basis, and their income might depend on the season, their client load, or their overall availability each month.
This means that self-employed clients like gig workers will need to provide additional documentation to verify their income.
Members of the gig economy also tend to have different tax documents than permanent workers. Any given gig worker might have a Form 1099-K, Form 1099-MISC, Form W-2, and/or Form 1099-NEC.
These clients might also need to provide more extensive records, like full tax returns or even bank statements.
Long story short, the mortgage industry hasn’t always been entirely accommodating of gig workers.
Tips for Mortgage Professionals Working with Gig Workers
So, how can you support clients engaged in the gig economy? Depending on your familiarity with borrowers in this demographic, there are at least a few things you can do.
Understand Gig Worker Finances
The mortgage process can be complicated — and that’s with all the standard documentation on hand! But gig economy income and tax documentation add an extra layer.
This step is especially important if you don’t have experience working with these kinds of clients, or if it’s been a while.
Take it upon yourself to learn as much as you can about gig worker finances. Read up on the most recent articles or check whether your state offers a continuing education (CE) course on supporting borrowers who are self-employed or gig workers.
This extra effort on your part could go a long way in helping these clients achieve their dreams.
Educate Gig Workers on Preparation
Once you’ve done your part, it’s time to clarify theirs.
Part of effectively managing the mortgage process for a gig economy client lies in communicating well ahead of time. At the very start of the process, make sure that the client understands there will likely be some extra steps in securing their home loan.
Then, encourage them to start organizing the records they might need (sending them home with a printed or downloadable branded checklist isn’t a bad idea) and building or maintaining strong credit.
Make sure to clarify that they can reach out with any questions or concerns as they work.
Practice Emotional Intelligence
Buying a home can be a highly emotional process for even the most stable permanent worker. When you tack on the added hurdles that members of the gig economy have to cope with, it’s not exactly surprising that their anxiety levels could increase.
This is where you can go above and beyond as a mortgage professional. Flex your emotional intelligence (EQ) muscles!
Celebrate the client’s wins. Mourn their losses. Ease their anxieties. Support their journey to homeownership, even if it doesn’t look exactly like the next client’s.
Wrapping Up: Mortgages in the Gig Economy
It’s not always easy to be a gig worker. These professionals might face inconsistent income, lack of benefits, potential isolation, and the struggle of continually searching for new opportunities. Jumping through additional hoops to secure their piece of the American dream on top of it all isn’t always an easy pill to swallow.
But the mortgage industry is adapting to the needs of gig workers, slowly but surely. And, with a dedicated mortgage professional just like you, they’re that much better off!
By working to understand gig worker finances, educating these clients on preparation, and practicing a little emotional intelligence, you could help these contract and freelance workers achieve their dreams. Now that’s a good gig!
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