No contingencies can be a bit scary, to say the least

Mortgage officer: Bob Gerson, California Bank & Trust.

Purchase price: $1.215 million.

Property type: Singlefamily home in south San Francisco.

Loan amount: $784,000.

Loantovalue: 64.5%.

Program: 30year fixed, high balance program

Rate: 3.375% plus .75% in points.

Backstory: My client was prequalified back in January this year and was looking to purchase his first home after 26 years as a renter. The main issue was that he recently became a selfemployed borrower with only four months of business returns and 18 months of total employment as the chief financial officer of an auto body shop.

Agency guides do allow for less than two years of business tax returns to be used, but there must be excellent compensating factors that will allow the income to be used. Although he worked in the auto industry as an accountant three years ago as a paid employee, having less than two years of returns, it would be doubtful this would go through.

It is always easier to go from being selfemployed to a paid employee since COVID19 and other factors for a steady income stream are taken into effect.

He had made several bids on homes in January and February but kept getting outbid in this hot market in the Bay Area.

Finally, in March, his offer was accepted, and there were no contingencies for a loan or appraisal, which was the only way to get his offer approved. For the task of getting this loan approved, we needed to get his 2020 personal and business tax returns, so that the bank can qualify him for this purchase loan.

With the assistance of his accountant, we were able to secure both returns. Typically the bank will average out the income for the past 16 months of income, but we were actually able to use just the 2020 returns to increase the yearly and monthly income, as well as eliminate some startup costs for the new business. As it turned out we were able to close on time and all parties were very happy to execute this new home and sale.