Michaela Phillips, Guaranteed Rate, Inc.
BOULDER – The 2016 US election created good news for the marijuana industry. Eight states legalized marijuana for either medical or recreational use. This means that over half of the US states have legalized marijuana. With this news comes more industry, income and opportunity for individuals involved in this growing industry.
When it comes to purchasing a home, many borrowers that work in the marijuana industry have come up against battles creating major headaches. Even though Fannie Mae will allow a W2’d employee to use their income to qualify for a mortgage, most large banks and credit unions still deny this borrower.
When I started talking about mortgages for employees in the marijuana industry, my focus was solely on letting potential buyers know that they had financing options if they owned less than 25% of the company and/or received a salary in the industry. Now I am happy to share that there are options for self-employed individuals in the industry as well. The alternative to a Fannie Mae loan is working with a Portfolio lender. A Portfolio lender typically holds on to the mortgage, they do still evaluate credit, income and assets when approving a mortgage, however, they associate this with the risk involved and offer an interest rate accordingly. Most Portfolio lenders offer an adjustable rate vs. fixed, but this can still be a better option versus no loan at all. With good credit and documented income, a marijuana business owner can apply for a mortgage with only 10% down. For those with a lower credit score, there are still options but a higher down payment may be required.
What does this mean for potential buyers? If you have been working hard and paying taxes in the cannabis industry, you may now qualify for a mortgage. Independent contractors who have a relationship with the marijuana industry now have an option to count marijuana-related income toward mortgage qualification. As a self-employed borrower the same guidelines will still come into play; a minimum two year employment history with the same company, two years tax returns for income qualification and sufficient assets will be required. I am hopeful that as we continue to see more legalization in the marijuana industry, we will continue to have more options for financing home purchases.
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No matter your profession, the mortgage process can be very complex. It all boils down to knowing who and when to ask
for help.
Michaela Phillips is the Vice President of Mortgage Lending at Guaranteed Rate, Inc., the 8th largest retail mortgage company in the country. Since entering the mortgage industry in 1994, she’s consistently been a top producer. Being a VP at Guaranteed Rate offers many advantages to her and her clients including unparalleled customer service, efficiency, and most importantly competitive rates. Contact Michaela at 303.579.5517, e-mail [email protected] or visit michaelaphillips.com. NMLS:312874.
