From Turned Down to Homeowner

Declined by Bank: Self-employed income didn’t qualify
Solution: 12-month business bank statement program
Clear to Close: Under 30 days
Result: First-time homeowner approved with strong qualifying income

This is one of those stories that reminds me why I do this.

I got a call from a local business owner here in West Chester. One of his customers was self employed and had just been turned down for a mortgage by his local bank. The bank only reviewed his federal tax returns and made a quick decision that the loan could not be done.

The business owner knew I was a mortgage broker and that I might have options his bank did not. He put us in touch.

When we sat down, I asked him to bring both his personal and business tax returns. Like many self employed owners, he had done exactly what most accountants advise. He reinvested into his business and wrote off as many expenses as possible. On paper, his income looked low.

I am self employed too. I understand that side of it, and I could immediately sympathize.

What stood out even more was his story. He was a first generation immigrant who had come to this country the right way. He started his own landscaping business, worked hard, supported his family, and had recently received his permanent resident card. His goal was simple. He wanted a home for his wife and two young kids.

That was all the motivation I needed.

Instead of relying on tax returns alone, we used a twelve month business bank statement program. This approach treats business deposits as income. His accountant provided a letter confirming the business typically ran at about twenty five percent expenses. That allowed us to use seventy five percent of his deposits as qualifying income.

Suddenly, the numbers made sense. He qualified comfortably.

One of his landscaping clients happened to be selling her grandmother’s home as part of an estate. He was not working with a real estate agent, so I stepped in and helped prepare the agreement of sale. I also contacted the estate attorney directly and explained that by not using a realtor, the estate could save roughly six percent of the sales price.

The buyer was allowed to complete a home inspection. The deposit funds were held by the title company. I stayed in constant communication with the estate attorney, the seller, and the buyer throughout the process.

We closed in under thirty days on a contract that originally allowed forty five.

I attended the settlement with him and watched him receive his keys. The emotion was real. From coming to this country on a work visa, to starting his own business, to getting his green card, to moving his family from a small apartment into a three bedroom home with a yard.

This was his. He earned it.

I was grateful to play a small part in that journey.

Stories like this are why I believe so strongly in looking beyond one set of numbers and taking the time to truly understand someone’s situation.