“Freelancers” Find It Tougher To Get Mortgages

A VFX artist emails me:

Talked to my mortgage broker today about refinance and first thing he asked was if I was W2 or 1099 now – he said that he cannot get banks to do loans for 1099 workers.

My CPA who does my taxes offers audit protection but refuses to do it for my 1099 income. As I’ve said before, if you are forced to accept illegal misclassification as a freelancer you run the risk of being audited and now it seems it will be harder for you to get a loan now that banks are tightening standards.

I’ve also questioned the feasibility of owning a home if you are a VFX artist who is always changing jobs and moving around.

I found these links useful about other 1099ers trying to obtain mortgage loans:

If you’re a 1099, or contract, employee, or if you own your own business, you can still buy a home or refinance, but you’re going to have a tougher time proving that you’re financially stable. Lenders see 1099 contract employees as temporary, even if you’ve been “temporarily” employed for years in this manner. Self-employed individuals (and those who receive 1099s) will have to show stable income for at least two to three years, which is usually done through tax returns.



Soldier On.


6 Responses to “Freelancers” Find It Tougher To Get Mortgages

  1. Shootsy says:

    Hey not to side with the banks far from it but by refusing they might actually help you not get caught in a very bad situation, after all can you really pay down $2k/month safely being 1099? That would mean you make [and will for the next 15/30 years] at least $7k/month. With a mortgage comes the tax, insurance and maintenance that will add nearly $1k/month for let’s say a $500k house. I’d rather advise 1099 to save a bunch before making the jump.

    And honestly ownership is way overrated/hyped and many people don’t realize the associated cost and time for maintenance etc. And what good is a house if you work 60+ hours a week?!

    • VFX Soldier says:

      That’s a good point. I agree and if you read my post on whether vfx artists should buy a home I show many senior artists and the price they paid and the result of what happened.

      Regardless the crux of the post is to show that 1099 is used by employers to avoid paying paroll taxes and has indirect consequences for the artist.

  2. Dave says:

    I went form 5+ years of w2 to 1099 and had couldn’t get a loan. Despite the work/security seemed the same, to them it was completely different. As soon as I switched jobs and back to w2 everything was better (except by then we just rented again)
    1099 trick seems to be on its way out no?

  3. Off for a scan on my fingers soon, can ardly type with this .
    Has anyone ever tried typing with a broken finger!?.

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    “Freelancers” Find It Tougher To Get Mortgages | VFX Soldier

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