Borrower qualifies using boarder rent from own business

Loan officer: Alex Greer.

Property type: Singlefamily residence in San Jose.

Appraisal value: $1.1 million.

Loan type: FHA 30-year fixed.

Loan amount: $715,000. Rate: 4.375 percent. Backstory: All these borrowers wanted to do was to get out of a 6.25 percent interest rate and drop their mortgage payment by more than $1,000 a month.

But multiple denials over the years from big banks and retail loan companies made that desire seem like an out of reach fantasy. The borrowers had come to the realization that they would never be able to refinance.

The borrowers were willing to give it one last try on a referral from a family member, who was a past client of mine.

I informed the potential borrowers that during my six years in the business, I had cultivated an extensive knowledge of the Federal Housing Administration guidelines that often times surpassed that of the lender’s FHA underwriter on my loans.

After sending over their documents, it became evident why the borrowers had been denied in the past. All they had was fixed income and a small business that they wrote off all of the profits on.

However, I noticed that they were claiming rental income on their primary residence. It turns out that their small business was renting a portion of their residence from them.

I knew right away that FHA only allows rental income from boarders of the subject property if there is a two-year history of receiving the income that is shown on the tax return and the borrower is currently receiving boarder income.

The borrower met both of those guidelines meaning we could use it as the last bit of income needed to qualify. Armed with the FHA guideline on boarder rent, a 740 credit score and an excellent loan-tovalue ratio, the loan was promptly submitted and funded 20 days later freeing the borrowers from their high interest rate and high payment mortgage.

Alex Greer, the Mortgage

Outlet, 408-352-5147, agreer@ themortgageoutlet.com.