At least one lender has opened the door to income from the marijuana industry buying, refinancing and pulling cash out.
Mortgage lenders knowingly and sometimes unwittingly provide residential purchase and refinance loans to tax cheats, money launderers and even straw buyers.
How so? Lenders typically face a low bar for income documentation, they don’t look too hard and they don’t ask many tough questions.
So, why can’t lenders provide mortgages for legally licensed, self-employed folks in California’s legal marijuana industry?
Last week, a wholesale mortgage lender in Encinitas quietly announced its “game on” for borrowers using cannabis-related income to cut a home loan. The only restriction is the lender won’t fund grow-at-home or grow-farm locations.
The terms are generous, the rate not so much. We’re talking a 720 or better middle FICO score and just 10% down on a $2 million mortgage. A 30-year mortgage with an initial five-year adjustable-rate lock can start as low as 4.6% for a primary residence. Qualifying is easy-peasy using 12 months of bank statement deposits. Or you can do 20% down for a second home or investment property with even lower rates.
Loan limits with this company soar to $7.5 million with a fatter 40% down payment.
The marijuana industry is pulling in plenty of money. It’s amazing to think folks who grow, cut and sell weed can’t get a home loan using their pot deposits. Just how big is the trade? Let’s explore …
Taxable sales for the second quarter of 2021 were more than $1.3 billion with total state taxes assessed at more than $333 million, according to the California Department of Tax Fee Administration.
California has 12,144 licensed cannabis businesses. Los Angeles County has 1,338, Orange County 115, Riverside County 403, and San Bernardino County 212, says spokesperson Christina Dempsey of the Department of Cannabis Control.