Big Changes Bring New Opportunities for People Working in the Cannabis Industry
Home loans for cannabis industry workers are a possibility!
If you are an employee of the cannabis industry, and you have no ownership in these companies, you have an exciting new opportunity for getting a home loan. Previously, home loans for cannabis industry workers were only available as portfolio loans, which come with a variety of restrictions and limitations. Thanks to changes from one of the nation’s most important lending organizations, cannabis workers can now use the Fannie Mae loan program.
Although there are restrictions for people who have ownership, this option is available to any employee of the industry, which was not the case before. This makes home loans more accessible and affordable to a variety of different borrowers, and it could be the difference for your home-loan search.
Fannie Mae Now Supporting Home Loans for Cannabis Industry Workers
The Problem: Cannabis Industry = High (Perceived) Risk
You may assume that if someone is earning a consistent income from a legal industry, which in many states now includes the cannabis industry, they should be able to use that income for a home loan. Whether the industry is insurance, construction, or cannabis, why should the income be treated any different? Legal is legal…right?
Even to this day, home loans for cannabis industry workers are treated with caution. The problem is that federal legislation still says that recreational marijuana is illegal. Although states say it’s legal, the federal government (which can, technically, override state law) could disrupt the industry. If a staunch anti-marijuana president, with the support of a staunch anti-marijuana congress, tried to drop a hammer on the industry, it’s conceivable (however unlikely) that he or she could.
Basically, there is a lot to sort out at the national level, which makes lenders nervous when offering home loans to people working in this industry. For this reason, there are still restrictions and limitations for these loans.
But, with more stability and acceptance coming to the industry, the tight lending restrictions are beginning to loosen.
Fannie Mae Loans Now Available to Cannabis Workers
If you are simply a W-2 employee working in the cannabis industry, you now have a wonderful opportunity: you can use a Fannie Mae loan. These loans are popular all across the country, and they offer reasonable terms and fantastic purchasing options for a wide range of consumers.
This loan product will provide a major benefit to anyone in the cannabis space. Even spouses and families benefit, as a couple can use their combined income to make a purchase, not just the single income from the person not working in cannabis.
With this loans program, you have access to lending with as little as 3% down on your conforming loan. You can also use a high-balance conforming loan, although there is a 5% downpayment requirement.
Basically, the guidelines for this option are the same as any conforming loan. You can use the financing with a debt-to-income ratio up to 50%, and you can access it with a loan as low as 640. Gifts from family members are an option, and they can be used to fund the downpayment. Non-occupant and co-borrower loan options are also available, providing outstanding access to this useful program.
Also, a 1099 employee will basically be treated the same as a W-2 employee for these loans. You will need to document that you have no ownership interest in the company and that your income does not come from the sale of cannabis. Essentially, this means a 1099 contract employee in the cannabis space will also qualify for a conventional loan, assuming there is no ownership of the company.
What if I am an Owner in the Cannabis Industry?
If you have an ownership stake in the cannabis industry, these Fannie Mae loans are unavailable. But you are not out of options. In this case, you actually have access to portfolio loans, which may not offer the same terms, but at least provide access to mortgage lending.
For the sake of this loan program, an “owner” is anyone with 25% ownership or higher in a cannabis business, or a member of a c-suite position in publicly-traded mortgage company. These loans are available through various portfolio lenders, so the qualification standards may be higher. Many will require a 20% downpayment, but there are some that will allow a home purchase with only 10% down. However, the 10%-down loans may come with greater interest rates, so talk with a lending agent about any issues or concerns you might have.
What Types of Properties Can You Purchase?
With these loans, you will have access to a wide variety of different housing options. You can, of course, purchase a single-family home, either an attached or detached structure. If you want something smaller, or perhaps something more affordable in an area closer to an urban center, you could also purchase a townhouse with these loans. You can even purchase a condo, as both warrantable and non-warrantable condos are available through this program.
While not specifically intended to be an investment-property loan, you could use this program to purchase a property with up to four separate living units. If you are interested in earning an income off of your purchase, this could be a useful option for your buying needs. However, there may be occupancy requirements, possibly forcing you to live in the property for roughly two years. Second homes and investment properties are an option, so talk with a qualified lending agent for more information.
What About an FHA, USDA, or VA Loan for People Employed in the Cannabis Industry?
Unfortunately, at this time you cannot get an FHA, USDA, or VA loan if you are employed in the cannabis industry. While there are a growing list of options, these government agencies do not recognize income for a cannabis job, and therefore will not support a loan for your purchase. This could certainly change in the future, but currently these options are off the table.
Get More Information About Qualifying for a Loan When Working in Cannabis
If you want to learn more about getting a loan while earning a living in the legal cannabis industry, contact our staff today. We are experienced in working with people from a variety of industries, and we will be proud to help you purchase a top-quality home. Contact us today to learn more about home loans for cannabis industry workers.