Financing Before You Find the House
A successful home purchase should begin with the financing, not with finding a property and hoping the loan works afterward. Before a buyer starts making offers, we want to understand the complete financial picture and determine which financing options are realistically available.
In many cases, we can complete an initial qualification during a 15-minute phone conversation. We review the intended purchase price and down payment, income and employment or business structure, available assets, credit profile, existing monthly obligations, anticipated property taxes and insurance, and the type of property you intend to purchase.
That initial conversation can usually tell us very quickly what direction makes sense. But we don't stop with a verbal qualification.
A Pre-Approval You Can Shop With Confidence
Once the necessary documents are provided, we verify the information supporting the loan and evaluate it against the applicable program guidelines. The objective is to identify potential problems before you make an offer, rather than discovering them after you are already under contract.
A pre-approval should mean more than entering numbers into a calculator and producing a letter. We want to know that the income used to qualify is supportable, the required funds are available, the credit profile meets the selected program, and the proposed transaction is consistent with underwriting requirements.
When we tell a buyer that the financing has been reviewed and they are ready to shop, we want that pre-approval to be solid enough that they can make an offer with confidence.
Of course, final loan approval remains subject to the selected lender's underwriting, acceptable property and appraisal, verification of information, and any other applicable loan conditions. But thorough preparation can eliminate many of the surprises that otherwise occur after a purchase contract has been signed.
More Than One Way to Finance a Home
There is no single mortgage program that is best for every borrower.
Depending on your circumstances, available financing may include:
- Conventional financing
- Jumbo loans
- FHA or VA financing
- Bank statement programs
- Non-QM and alternative-documentation loans
- Financing designed for self-employed borrowers
- Second-home financing
- Other specialized programs based on the borrower and property
A salaried borrower with straightforward W-2 income may have a very different optimal financing structure from a business owner whose tax returns contain substantial legitimate deductions. A borrower making a large down payment may have different priorities from someone who prefers to preserve liquidity for investments, reserves or other purposes.
Our job is not simply to find a loan that works. We evaluate available programs and structures to determine which reasonable option provides the most favorable combination of rate, cost, down payment, monthly payment and qualification requirements for your particular situation.
We Look at the Complete Financial Picture
Mortgage qualification involves several factors working together. We evaluate:
- Intended purchase price and down payment
- Desired monthly housing payment
- Income and the most appropriate method of documenting it
- Available assets and required reserves
- Credit profile
- Existing monthly obligations
- Property type and intended occupancy
- Loan amount and applicable program limits
- Available conventional and alternative loan programs
- Interest rate, lender costs and overall financing economics
Sometimes maximizing the loan amount is not the best objective. A different down payment, loan structure or program may produce a better financial result.
For that reason, we discuss not only “How much can you qualify for?” but also “What financing structure makes the most sense for you?”
Self-Employed and Nontraditional Income
Home financing can require additional analysis when income does not fit the traditional salaried W-2 model.
Business owners and self-employed borrowers may have strong actual cash flow while showing considerably less taxable income after legitimate business deductions. Depending on the circumstances, qualification may be based on traditional tax-return analysis or alternative programs using personal or business bank statements and other permitted documentation.
Rather than assuming that one income calculation is the only available answer, we evaluate the programs that may reasonably fit the borrower's actual financial situation.
This can be particularly important when a borrower has already been told by another lender that they do not qualify under a conventional income calculation.
If You Don't Qualify Today
Not every initial conversation should result in an immediate loan application.
If the numbers do not support the proposed purchase today, we would rather identify that before you begin shopping. We can explain what is preventing qualification and, when practical, what could change it.
That may involve reducing certain obligations, accumulating additional funds, improving credit, establishing a longer income history, adjusting the target purchase price, or simply using a different financing program.
The objective is not to push every borrower into a loan. It is to establish a realistic financing strategy so that when you are ready to make an offer, you understand both your options and your limitations.