Hi Greg,

I am looking for some advice.  My wife and I are looking to move up from our current started home.  We have been in our home for 6 years.  Over the past few years, our family has grown and we need more room to spread out.  Like most parents with young children, we are starting to think about school districts and where we would like to raise our family.

Our current home, has been a great investment and we will see a nice profit when we sell.  We plan on rolling the profit from our current home into the down payment on our new home.  Based on my estimate on the sale price of our current home we expect to put 20% to 30% down.

Both myself and my wife work and will both be on the mortgage.  We both have A+ credit.  My wife has been with her employer for 6+ years and receives pay stubs and W2’s.  My concern is with my income.  I have been a gig worker since 2018.  I will say that I have been very successful as a gig worker.  My income has been steady and I plan to continue into the future.

I am paid on a 1099.  Given the expenses that I incur as a gig worker I am concerned about how an underwriter will view my income.  Our goal is always to maximize our tax deductions every year!

We are ready to start the search for our new home.  My wife and I would like to be in the new home by the end of this year.  Any advice that you can give to someone in my situation would be appreciated.

Tom Fox

 

Tom –

Thanks for reaching out to me!  It sounds like you and your wife are in great shape with the equity in your current home.  The fact that you and your wife both also have fantastic credit scores will be a huge help in your mortgage process.

As I always say, there are three primary factors that lenders/underwriters are concerned with for mortgage approval.  The first is assets.  You will always need to document all the funds that will be needed at closing.  These funds include down payment, closing costs, pre-paid taxes and insurance among other items.  The funds can come from the sale of a property, your bank account, or a gift from a family member.  It sounds like you will be set on that end.

The second factor is credit score / credit history.  Different mortgage programs have different minimum credit score requirements.  Given that fact that you stated that both you and your wife have A+ credit – you should be all set on that end as well.

The third major factor, and the one that you are most concerned with, is debt-to-income ratio and verifiable income.  Traditionally on files with client who have 1099 income, underwriting would required a full two years tax returns.  In that scenario, expenses are backed out often leaving less income to use for qualification.

Traditional mortgages have also been slow to understand or account for the huge rise in gig workers over the past 5+ years.  The number of gig workers and contract workers has exploded recently.  The number of workers in the United States that will be paid on a 1099 in expected to increase every year for the foreseeable future.

The great news – for you and yoru wife – and other 1099 workers in a situation similar to yours is that there are new Non QM mortgages available.  There is a 1099 program available for clients paid on a 1099.  With this program the lender is only looking at the income reported on your 1099.  Underwriting does not require tax returns.

Through the 1099 program you can purchase a home with a little as a 10% down payment.  Obviously, you can always put more down if you choose.  What is so amazing about this product is that you are only required a W2 that covers the full calendar year prior to application.  This means that a relatively new gig or contract worker with good credit and 10%+ down payment is eligible.

The 1099 mortgage program will be perfect for you and your family.  This 1099 mortgage will help you and your family get into an amazing home in your desired location.  As with any mortgage there are some in’s and out’s, but for the most part it is very straight forward.  If yoiu would like to further discuss the details of your scenario and get started on your pre-approval process please reach out to me directly by dm, email or phone call.

I look forward to speaking with you further!

Greg Rutolo