Although the industry is growing, cannabis industry home loans remain difficult to secure. This article will discuss the documents you’ll need to complete one of these loans.
The cannabis industry is growing larger every year. With more states legalizing medical and recreational cannabis, the industry as a whole is growing at a rapid pace. The latest information from Grand View Research says that the legal marijuana industry will reach a total of $70.6 billion by 2028, reaching a growth rate of almost 27%.
This growth, which is driven by an overall easing of laws nationally and a state-by-state acceptance of recreational use, means that more and more people are working in the cannabis industry.
And these workers are just like anyone else. They deserve all the pillars of financial security and prosperity, including decent wages and retirement accounts. They also deserve affordable home loans.
Unfortunately, because of the industry’s growing but uncertain future, cannabis industry home loans can be more complex. They are certainly not impossible, but they can be more difficult.
Borrowers need a variety of documents for cannabis industry home loans, but they are, in most cases, the same documents you’ll need for any other form of financing.
The Challenges of a Cannabis Industry Home Loan
The cannabis industry is a unique and interesting market. Technically, workers and employers in this industry are dealing with a substance that has been deemed illegal by the federal government. Yes, acceptance of this substance is increasing; the general population and national consciousness is far more accepting of marijuana use, a trend that is seen in the easing of laws for both medical and recreational marijuana, as well as other products like hemp as a raw material.
But the simple fact remains: nationally, marijuana is an illegal substance.
Lenders, for obvious reasons, want to know about your income. They want to know that your income is secure, sizable, and legal. If your income comes from an illegal gambling ring, for example, they won’t be eager to write a home loan. The uncertain legal nature of cannabis, therefore, creates complications.
Also, many home loans are supported and insured by the federal government. FHA loans, VA loans, and USDA loans, to name a few, are guaranteed by these federal offices. Because marijuana is illegal at the federal level, cannabis industry home loans are ineligible.
This uncertainty has a trickle down effect that impacts borrowers. Simply put, there is a lot of perceived risk with these home loans. (Whether this risk is real or not is another conversation.) Therefore, you may need a unique form of financing, and you may have to bring a wide variety of documents to secure the loan.
The Documents You Need for a Cannabis Industry Home Loan
Proof of Residence in a State Where Cannabis is Legal
To secure a cannabis industry home loan, you need to be employed and live in a state where cannabis is legal. For example, if you live and work in the state of Utah, cannabis is illegal in your state, which means your income is illegal as well. However, if you work in California, you are able to secure the loan, as recreational and medical marijuana has been made legal in this state.
Proof of residence is a pretty easy requirement to meet. A simple driver’s license, as well as documents with your address, will verify your residency to the lender.
Proof of Work
Like many other loans, you’ll need to verify that you have worked in you current position, or at least in the industry, for roughly two years. The longer you have worked in a specific industry, the more likely it is that you’ll maintain that income in the future.
There are many documents that prove you have worked in the industry for years. Contract information, pay stubs, and even company records can show the lender that you have maintained employment in the cannabis industry.
Tax Returns
These documents are used in practically all types of mortgages, including cannabis industry home loans. You’ll likely need these documents regardless of your status or specific role in the industry.
Tax returns provide critical information to a lender, and most loan applications will need at least two years of returns to secure financing. If you need help securing tax returns, your accountant should be able to help or you can always contact the IRS to request tax return information.
Paystubs
Although your tax returns show your income, you may also need paystubs. Essentially, these documents will provide further detail on your earnings, allowing you to secure a high-quality loan with the best possible terms. The more information you can provide, the better, so even if you bring tax returns for income, bring paystubs as well.
Bank Statements
A bank statement could be one of the most useful documents that you use on an application. In fact, they can be so useful that bank statements are sometimes used, on their own, to create a loan.
Bank statements show more than just your income. They show your regular expenses and total savings, which can help lenders gain a clear picture on your overall financial situation.
Rental Background
Another document that you may need is a description of your rental history. Of course, this assumes that you have been renting over the previous years and have not owned a home in the recent past.
Lenders want to see that you have been able make payments to landlords in a timely fashion, as this is a strong indication that you will be able to make mortgage payments in the future. Information on your rental history, as well as contact information for landlords, may be requested by lenders.
Apply for Your a Cannabis Industry Home Loan Today!
With these documents, you should be able to secure an affordable home loan. We believe that everyone should enjoy the benefits of owning a home, regardless of their employment.
If you are looking for a high-quality cannabis industry home loan, contact our team today. We have the skills and experience to help cannabis workers secure affordable, reliable financing for their purchase, and we’ll do everything in our power to ensure you have a loan that fits your needs and budget!
