Traditional underwriting often fails to account for fluctuating income
Gary Tsang (pictured) has stayed ahead of the curve by adapting to industry change. Now, running his own brokerage, he’s focused on one of the toughest borrower segments - self-employed professionals.
For Tsang, the modern mortgage market is about adaptation, particularly as technology and shifting borrower demographics change expectations.
"People want speed. They want a streamlined process, and they want to do most of it on their phones. I visit Malaysia two months a year, and my clients don’t even know I’m out of the country. That’s the paradigm shift we’re in,” he said.
Self-employed borrowers, however, remain a tough segment to serve. Traditional underwriting standards don’t always align with the realities of modern business ownership.
"You see a lot of inconsistency in their income," Tsang said. "Some have strong Q4 earnings, others peak in Q1, and that variability makes lenders uncomfortable. Then there are startups with heavy upfront costs—on paper, their P&L looks ugly. Investors see expenses outweighing income, and they don’t want to take the risk."
Tsang believes that alternative lending strategies could provide solutions.
"[For instance], we start looking at business contracts," he said. "If you sign a deal with a Fortune 2000 company that guarantees payment in three months, that should count for something. Or what about debt-to-asset ratios? If a business owns high-value equipment or property, that should factor into the risk assessment. There are so many ways to assess financial viability that aren’t being utilized."
Fintech, he believes, will play a major role in changing mortgage accessibility for self-employed professionals.
"People talk about AI, but right now it’s mostly just data regurgitation. What we need is AI that can actually assess risk in a meaningful way. Maybe that means replacing credit scores with a broader social currency model—how reliable someone is as a person, not just as a debtor."
One emerging trend is the recognition of gig economy earnings.
"Some lenders now accept 1099s instead of a P&L or bank statements,” Tsang said. “It’s a step in the right direction. A consultant with two years of solid Upwork earnings should be just as creditworthy as someone with a traditional job. The challenge is getting more lenders to buy into that mindset."
Beyond underwriting criteria, Tsang sees rising costs as the biggest obstacle in the mortgage market, and insurance is another growing concern.
“Everyone talks about interest rates, but the real killer is property tax," he said. "In states like California and Texas, it’s the number-one reason people hold off on buying. Even if you don’t have a mortgage, you still have to pay it—forever. It makes you wonder, are we really owning real estate, or are we just paying rent to the government?
"With all the wildfires and disasters, insurance premiums are skyrocketing. I refinanced a home where the mortgage was $3,000 a month, and the insurance? $1,200 a month. It’s insane. And if you don’t have insurance, you can’t get a mortgage."
Despite these challenges, Tsang remains committed to adapting his business and helping borrowers navigate the hurdles.
"At the end of the day, the market will keep evolving,” he said. “My job is to evolve with it. Whether it’s technology, new underwriting models, or shifting consumer expectations, you either keep up, or you become a relic."
