The path to homeownership isn't one-size-fits-all, and neither are today's borrowers.
While many borrowers still earn income from traditional salaried positions, a growing number are generating income through freelance work, independent contracting and other forms of self-employment. According to The Future Workforce Index 2026 from the Upwork Research Institute, 38% of skilled workers now perform freelance work.
At the same time, independent work is becoming a long-term career choice rather than a temporary side hustle. MBO Partners' 2025 State of Independence Study found that 72.9 million Americans now work independently, while a record 5.6 million independent workers earn more than $100,000 annually.
For mortgage professionals, that’s an important shift. As Mary Kay Scully, Director of Customer Education at Enact, explains, as more borrowers turn to gig work, understanding how to evaluate and document their income can help create a smoother experience for everyone involved.
The Gig Economy is Broader Than You Might Think
When many people think of gig workers, rideshare drivers and food delivery workers often come to mind. However, the gig economy includes a much wider range of professions and income arrangements.
The IRS defines the gig economy as income earned by providing on-demand work, services or goods, often through a digital platform. In practice, gig workers can include consultants, designers, writers, tutors, photographers, real estate professionals, technology contractors, tradespeople, healthcare professionals and many other independent workers.
What often distinguishes gig workers from traditional employees is not necessarily the type of work they perform, but how they are paid. Rather than receiving a regular paycheck from a single employer, they may earn income from multiple clients, projects or contracts throughout the year. Some receive 1099 income, while others operate as sole proprietors or own small businesses.
Borrowers may also participate in the gig economy in different ways. For some, independent work is their primary occupation and source of income. Others use freelance or contract work to supplement income from a traditional full-time job. A borrower could be a marketing consultant with several business clients, a software developer who completes project-based work, a photographer running a growing side business or a healthcare professional picking up contract assignments between permanent positions.
As flexible work arrangements continue to grow in popularity, these income sources are becoming increasingly common in mortgage applications. While the occupations themselves vary significantly, borrowers with gig income often share one important characteristic: their earnings may not fit neatly into a standard paystub or W-2.
That's where asking the right questions becomes critical.
Start With the Borrower's Story
One of the biggest mistakes lenders can make when reviewing nontraditional income is focusing on the documents before understanding the borrower.
Before you start calculating income, take time to learn more about the borrower's work history and business structure.
A few important questions include:
- Does the borrower own the business?
- If so, what percentage of the business do they own?
- How long have they been receiving this income?
- Has all of the income been reported on tax returns?
- Has the income been relatively stable?
- Have there been any significant gaps in receiving this income?
The answers can provide important context for the documentation you'll review later and help identify potential concerns earlier in the process.
Income CalculationStarts With Good Documentation
Nobody likes surprises during underwriting.
One of the best ways to support a smoother process is to ensure you have the right documentation from the start. Properly documenting income and understanding applicable agency requirements can help reduce delays and improve the likelihood of getting the calculation right the first time.
When a borrower has a 25% or greater ownership interest in a business, personal and business tax returns may be required. If a borrower receives 1099 income, personal tax returns will typically play an important role in documenting and analyzing that income.
Equally important is evaluating the stability of the income. Variable income isn't necessarily a problem, but income that cannot be demonstrated as stable and likely to continue may not be eligible as qualifying income.
That's why understanding the borrower's history is just as important as understanding the numbers themselves.
Turning Knowledge Into Action
Understanding gig income is only part of the equation. Having access to reliable tools and educational resources can help loan officers confidently apply that knowledge to real borrower scenarios.
Enact provides a variety of resources to support income analysis, including income calculators, on-demand training, and live webinars. These tools can help simplify complex calculations, reinforce best practices and support a smoother lending experience.
An Opportunity to Better Serve Borrowers
As the workforce continues to evolve, loan officers who understand nontraditional income can better support a growing segment of homebuyers.
Many gig workers have strong earning potential, successful businesses and a desire to become homeowners. What they often need is a trusted professional who understands how to navigate the documentation requirements and explain the process clearly.
By developing confidence in working with gig income, loan officers can do more than calculate income correctly. They can simplify the mortgage experience for borrowers who may have been told their situation is too complicated or too different.
The workforce may be changing, but the goal remains the same: helping qualified borrowers achieve homeownership. Understanding gig income is simply one more way loan officers can meet borrowers where they are and position themselves as a valuable resource throughout the process.
Source: Mary Kay Scully is the Director of Customer Education at Enact Mortgage Insurance with over 30 years of industry experience. She trains over 35,000 mortgage professionals annually on topics including tax return review, fraud detection, process improvements, and compliance.
The statements in this article are solely the opinions of Mary Kay Scully and do not necessarily reflect the views of Enact or its management. Opinions expressed are for educational purposes only. Always review current, applicable agency guidelines and consult your compliance and legal advisors when exploring MI options.
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