Skip to main content

Can You Get a Mortgage If You Have Variable Income?

If your income is variable and you are worried you may not be approved for your loan, get in touch with our team.

The gig economy is advancing at a fast pace. Experts estimate that gig workers will account for almost 80% of the workforce by 2030. And while some benefits of the gig economy are evident, such as more flexibility, save time and money on work commutes, and allowing people to specialize in what they do best, it’s widely believed that gig workers rarely have a chance at getting a mortgage.

Is this assumption true? Can you get a mortgage and purchase a home if you have a variable income?

Establish Your Net Income

What lenders want to see before determining if you will get approved for a loan is two years of personal and business tax returns. Keep in mind that they will consider your net income, not the gross one, so you need to establish your base revenue. To do that, you need to take your total net income for the past two years and divide it by 24.

Be ready to explain the fluctuations in your income (if there are any.) If, for example, you took a few months off to learn a new skill, you should be ready to prove that to the lender.

Pay Attention to Your Debt to Income Ratio

Another thing lenders will be looking at is your debt to income ratio. In other words, the lender will look at how much money you own versus how much money you make every month. A good debt to income ratio should be less than 43%, so make sure to pay any consumer or business debt before applying for a mortgage.

Work on Your Credit Score

A variable income may make lenders warier of your ability to pay back your loan, so you need to be better prepared on other fronts. Try to improve your credit score and get it as high as 700, although you may be able to get an FHA loan with a credit score of 640.

Save for the Down Payment

Saving up enough money for a down payment to buy a house may be one of the biggest struggles for gig workers with a variable income.

The amount of down payment depends on the mortgage’s size and the type of loan you are applying for. Putting 20% down on a home will increase your chances of getting approved at a decent rate, but loans like FHA require as little as a 3.5% down payment. So, you have a bit of room to wiggle even on a variable income.

Can We Help?

At Better Rate Mortgage, we specialize in making the home purchase or refinance process easier for everyone. If your income is variable and you are worried you may not be approved for your loan, get in touch with our team, and we will help you prepare your documents and guide you through this process.

Open the door to more.

Get Started Today

Whether you’re purchasing your first home or taking cash out to make your dream home even dreamier, the door is open. Welcome to Better Rate Mortgage.

Apply Now
Couple laughing and holding keys to new home