Sometimes it takes a unique loan officer with multiple options and a wide range of experience to get a borrower approved for a mortgage.
People who work in the cannabis industry, for example, often experience difficulty when applying for a loans, including home mortgages. The reasons for this difficulty can be complex, but it essentially comes down to the simple fact that cannabis is still illegal according to the federal government. Because the product is technically illegal at the national level, loans that are supported by the United States government are harder to secure for people working in cannabis distribution centers and other facets of the industry.
There is also the uncertainty involved with these loans. Right now, many states are making recreational and medicinal cannabis use legal, but it’s entirely possible (however unlikely) that the federal government could declare a crackdown on these laws. If it’s still illegal at the federal level, technically speaking, federal authorities could enforce anti-cannabis legislation. (This seems unlikely, as you would basically need a strong anti-cannabis president to order strict enforcement.) Either way, there is uncertainty, which means the incomes generated from this industry are uncertain as well.
All of these factors make getting a loan while working in the cannabis industry more difficult.
However, there are options available. Certain investors and lending institutions are willing to work with people who make a living in the cannabis industry.
Getting a Loan While Working in the Cannabis Industry: Option 1
Note: This is part of a series on loan options for people who work in the cannabis industry. If you want more information about the general issues, please see our article “How to Get a Loan While Working in the Marijuana Industry.” You can also check out Option #2.
The first option we offer comes from an investor who does not have restrictions related to property type, but does have restrictions on the type of job someone can hold in the cannabis industry. This is a reliable option for borrowers who want a high-dollar loan with low interest and no prepayment penalties.
Let’s explore this first option to see if it is right for you…
Loans Up to $7,500,000!
We need to start with one of the most important aspects of this loan program: the exceptional loan options. With this loan, you can get financing up to $7.5 million! However, to borrow this large amount, you will need a significant downpayment; in this case, 35%. But if you are borrowing a lower amount, you can actually use this program with as little as 10% down. For example, if you are borrowing $1.5 million or less, you will only need 10% down on the purchase.
Here is a complete list of the downpayment requirements in relation to the total financing:
- 90% financing to a loan amount of $1,500,000
- 80% financing to a loan amount of $2,000,000
- 75% financing to a loan amount of $3,000,000
- 70% financing to a loan amount of $5,000,000
- 65% financing to a loan amount of $7,500,000
No High Interest Rates
With the higher risk (or at least higher perceived risk) that comes with loans to people in the cannabis industry, it’s a fair assumption that there would also be higher interest rates. (One of the fundamental principles of lending is that when risk is high, interest is high.) However, these loans can actually be secured with interest rates that are not higher than typical mortgages. Specific rates for individual loans will vary based on credit, loan amount, downpayments, work history, and other factors, but in general you an expect to see loans that do not have a higher interest rate.
No Prepayment Penalty
Another major advantage for these loans is that they do not come with prepayment penalties. Essentially, each loan is based on a fixed schedule of payments, and each payment that is made reduces the overall principle. If a loan is paid off early, the total amount of interest earned by the lender is reduced, as there is less time for interest to accrue. This means that, despite doing the same amount of work and lending the same amount of money, a lender earns less if the loan is paid off early. For this reason, many lenders will add prepayment penalties to their loans, which acts as a guard against the potential losses of early payment.
These loans, however, do not have a prepayment penalty, so you are free to pay it off early without risking additional costs.
Eligible for Purchases in Washington, Oregon, and California
As we all know, recreational and medicinal marijuana is only legal in certain states, so obviously these loans are only available to people living in these states. Right now, the investor that offers these loans in making them available along the entire West Coast, including all of Washington, Oregon, and California. These are the only three states where this loan option is currently available. (If you live in Utah, we may be able to help. Contact our team for more information.)
Multiple Properties Available for Purchase
Perhaps the best factor for this loan program is that it allows cannabis-industry employees to secure financing for many types of properties. You can use this loan option to purchase a single-family primary home, which is the basic real estate purchase for most borrowers. You can also use the option to purchase a second home; if you want to buy a vacation property or a second house closer to work or family, you can do so with this loan. Even investment properties are eligible, making this a well rounded loan program.
Limited to Certain Employees
The only real issue with this loan program is that it is not available to an owner of a cannabis company, nor a CEO or other high-level executive. However, all other employees in the industry should be eligible.
Excellent Home Loans for People in the Cannabis Industry!
If you work in the cannabis industry and are interested in learning more about this program, contact our staff today. We’ll show you all your options so you can make a fully informed decision!
