Freddie Mac and Fannie Mae, the country’s two largest sources of mortgage money, are reportedly working on ways to make qualifying for a home purchase easier for people earning money in the “gig” economy.
The gig economy refers to activities such as driving for Uber, shopping with Instacart, renting your home out on Airbnb, or any other job that allows workers to set their own hours, work for as little or as long as they please, and get paid as an independent contractor. Last year, a report released by Intuit, which owns TurboTax, estimated that roughly 34% of the U.S. workforce earned money in the gig economy, and projected that number to grow to as high as 43% by 2020.
While these “gigs” have proven to be reliable sources of income for many Americans, using them for mortgage qualification purposes has been problematic. Lenders typically look for 2-years of documented income and reason to believe that those earnings will continue for several years. Earnings from gig economy jobs don’t always neatly fit into these boxes, making it difficult for lenders to use them for mortgage qualification. Fannie Mae and Freddie Mac are looking for ways around this, so that people earning thousands/month in the gig economy can use that money to gain access to credit in the mortgage market. Neither Freddie nor Fannie have disclosed what options they are pursuing, but Freddie has confirmed a partnership with Loan Beam, a software company which provides automated income verification for gig-economy workers. Depending on what Fannie and Freddie implement, this could help many out U.S. workers who supplement their income in the gig economy get on the path to homeownership.