Millions of people now earn part of their living through an app, a freelance contract, or a side gig. Government data on this kind of work has tracked the shift for years. If that describes you, one number matters more than any other when you apply for a mortgage. That number is the share of your income that comes from that work.
The 25% line
Fannie Mae’s Selling Guide sets a specific threshold. Say 1099, commission, or gig income makes up 25% or more of your total income. A lender then treats you as self-employed. That holds even if you never registered a business. It holds even if you never think of yourself as a business owner. Under 25%, that income is usually treated more like ordinary income, closer to how a pay stub gets handled. At 25% or more, it switches to the full self-employment path. That path is two years of tax returns, plus the same add-back and averaging rules covered in this site’s article on how lenders read tax returns.
Other sites rarely state this threshold as a precise number. Many just say gig income counts toward self-employment, without saying where the line sits. Fannie Mae states it plainly. Freddie Mac’s own guide, in Chapter 5300, takes a similar approach to self-employed income more broadly.
Where you land
| Share of income from 1099 or gig work | Likely documentation path |
|---|---|
| Under 25%. | Treated more like ordinary income, similar to a pay stub. |
| 25% or more. | Treated as self-employment: two years of tax returns and averaging. |
Cross 25% of your income from 1099 or gig sources, and a lender is likely to treat you as self-employed, with two years of documentation, not a pay stub.
A simple way to check your own number
Add up your total monthly income from every source. Then add up just the part that comes from 1099 work, commissions, or gig apps. Divide the second number by the first, and multiply by 100. Say your total income is $6,000 a month. Say $2,000 of that comes from a delivery app. That is 33%, which crosses the 25% line. You would likely see the self-employment path applied to that income.
Two documents will settle this question for most readers: a 1099-NEC form, the tax form a gig platform or client sends you instead of a W-2, and a simple record of your total pay for the year. Once you have both, the math above takes a minute to run. Once you land over the 25% line, this site’s self-employed document checklist covers everything a lender is likely to request next, and this page is part of the broader guide for self-employed borrowers.
One year can be enough, with the right proof
The two-year rule is not absolute. Say your gig or 1099 income is stable or rising, and your prior work history supports that pattern. A lender may then accept one year of documented income instead of two. This is not automatic. It depends on how convincing your history is, and how the lender reads it. A driver who has worked the same platform steadily for three years has a stronger case here than someone who just started six months ago.
Commission income follows a similar rule
Say part of your pay comes from commission rather than gig work. A similar 25% threshold applies. Commission income, pay based on sales or deals closed rather than a flat salary, gets the same self-employment-style treatment once it crosses that share. This page focuses on 1099 and gig work. But the underlying logic is the same either way. Once a big share of your pay is not a guaranteed flat salary, a lender wants it averaged over time, not judged on one strong month.
This is a conventional-loan rule, not a universal one
The 25% line described here comes from Fannie Mae and Freddie Mac, the two companies behind most conventional loans. FHA and VA loans, backed by different government agencies, set their own rules for gig and 1099 income. Those rules are not the same 25% cutoff. If you are applying for an FHA or VA loan, do not assume this threshold applies to your file. Ask that lender directly which rule it is using.
Platform income and multiple gigs
Many gig workers earn from more than one app at once, a rideshare platform on weekdays and a delivery app on weekends, for example. Fannie Mae’s guide treats all of this platform income, money earned through an app rather than a traditional job, the same way it treats other 1099 income once it is documented. What matters is the combined share of your total pay, not which single app it came from. If you drive for two platforms and freelance on the side, add all three together before you check the 25% line, since a lender will look at the total, not each source in isolation.
What this means for you
None of this tells you whether you will qualify. It tells you which paperwork path a lender is likely to use once your gig or 1099 share is known. If you land over 25%, read how lenders read tax returns next, since the same averaging rules will apply to you. If you land under 25% and your income has been steady, your file may move closer to how a standard, pay-stub-based application gets handled.
On this site’s $320,000 loan example, at 6.5% with 1 point, principal and interest run about $2,023 a month, a payment you can test with your own numbers on the mortgage payment calculator and weigh against whichever income number your documentation path produces.