Confessions of an Ex-Banker: How to Get Your Next Loan Approved, Guaranteed.

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Do you wanna hear something not a lot of folks know about me?

I used to be a front-end personal banker at a national bank.

Yep, I was the guy who sat in the desk and took loan applications and tried to get you to refinance your house. Man, I hated that job. Really, it was awful.

So much sales pressure, so many hours of staring at the clock. So many reminders that I should be out investing my money, rather than working for it.

However, my job did give me some inside information about how the loan process works. Want to know what I found out? Loans were like a gun safe. They could be opened with the right code.  Every time.

I titled this post with the word “guaranteed” NOT because I believe you will always be able to get a loan approved, but because I wanted to demonstrate that the lending process is not a mystery. It’s a lock that can be opened with a code. If you enter the right code, you WILL get your loan approved.

Can you enter that code today? Maybe, maybe not.

Unlike the code to a gun safe, this code is not something I can simply tell you; it’s something you need to have. But I do know that IF you enter it right, if you have what it takes, you are going to get approved. Whether you are looking to buy your first home, purchase an investment property, refinance a current loan, or something totally different, this post will give you the tools you need to crack that code and hear a resounding “yes” from the banker, every time.

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Understanding How a Loan Works

Before getting into the details of just how to get your loan approved, let’s talk about the basics. How does a loan even work?

Obviously, there are a lot of different kinds of loans and lenders. There are conventional banks, mortgage brokers, portfolio lenders, hard money lenders, private lenders, and more. Each is going to have their own system. However, let me make a few quick points about the loan process: Typically, the person who you are talking with is just a salesperson (like I was). Here’s the secret that makes the entire loan-procuring process 10x easier: They are not the ones ultimately responsible for saying “yes” or “no” to your loan.

When you go into a bank and sit down with the banker, most likely they are simply there to collect your information and be the contact person for you. The real decision-maker is in the “underwriter.” The underwriter is an individual trained to look at all the puzzle pieces that the salesperson gives them and approve or deny a loan based on facts. The underwriter knows all the rules, laws, and regulations and can make an informed decision. However, while the underwriter has all the power, the underwriter is usually not very creative and definitely not emotionally involved (purposefully). Therefore, to get a loan approved, you must accomplish two things:

  1. Convince the front end sales guy about the worthiness of you and your loan
  2. Get the front end guy to convince the back end underwriter about the worthiness of you and your loan

I find that #1, convincing the front end guy, is always easy. They are very quick to say, “Yeah, no problem. We can do that.” I ran across this about a dozen times when trying to refinance my recent 5-plex. Over and over, I heard it: “Yeah, Brandon, no problem. We can do that loan for you, no problem!” Then six weeks go by, and I get that fateful call, “Hey Brandon, this is [insert sales banker’s name here], and it actually looks like we can’t do that loan. You see, our bank will only [insert excuse here].”

I don’t blame the banker, as I used to be one. I had one whole week of training, and I was sent out onto the sales floor to secure multi-million dollar loans. In fact, I was paid commission on loan APPLICATIONS in addition to loan closings. In other words, as a front-end banker, it was in my best interest to get someone to apply for a loan whether or not I thought they could actually get approved. That wasn’t my job; that was the job of the underwriter. I was just collecting leads and acting as “the middle man.”

However, while the banker is not the one ultimately responsible for approving your loan, they are the first (and perhaps most important) person to focus your efforts on. Let’s talk about that.

The Banker’s Role in Getting Your Loan Approved

Let me tell you a quick story about myself — not to pat myself on the back, but to illustrate this point. When I worked at this bank, I was able to close twice as many deals as the other banker who worked there. Twice as many.

We both had the same number of leads, the same number of applications, using the same underwriters. But I was able to do twice as much.


It’s the same reason I am able to buy twice as much real estate as many for almost no money down: Because I was creative. You see, most people don’t punch the code in right the first time when trying to get a loan approved; there is something wrong with it. A boring banker or underwriter will simply say, “No, sorry” and hang up the phone. But I was different. Instead of saying, “I can’t get this loan approved,” I always asked myself “How can I get this loan approved?” See the shift in thinking?

Now, I didn’t do anything unethical or illegal to get these loans pushed through. Sometimes it was as simple as paying off a small credit card first or changing the loan type. My point is: When you start looking for a loan, look for a creative banker. You want someone who is not simply going to say “yes” or “no” like a computer, but someone who is going to fight to get your loan approved.

Perhaps the best way to find this, at least when looking to get a loan on a piece of property, is to ask some real estate agents who their preferred lender is.  In my town, 9/10 agents will all say the same person. Find this person – that’s your first step in getting your loan approved.

Now, even the best, most creative banker is not going to think of everything. This is why it’s ultimately UP TO YOU to make sure your loan gets approved. No, you didn’t just misread that. Once you finish this post, you’ll have no excuse to simply “apply and pray” for loans.  You’ll be able to know, or at least have a very good indication, of whether your loan is going to be approved or denied. No matter how good your banker is, they still can’t turn a pig into a pancake. It must pencil out for the underwriter. To make sure it does, let’s talk about how an underwriter thinks…

Understanding How an Underwriter Thinks

Let me tell you a little industry secret: lenders need you more than you need them.

Think about that. Without borrowers, a lender makes no money. Why else do you think banks and mortgage companies spend hundreds of millions of dollars on advertising? They need us! So why does it seem so difficult to get a loan?

To put it plainly, a lender follows the exact same advice I give new real estate investors: it’s better to do NO deal than a bad deal. In other words, they would rather do no loan than lend on something that will go bad. This seems pretty obvious, but it’s the first step in getting your loan approved. A loan is a gamble for the lender, and lenders only want to bet on sure things. This is why it appears so hard to get a loan — because you have to prove you are a good bet.

So, what constitutes a “good bet?” Well, I don’t know because I don’t know YOUR lender. However, there is a really easy way for you to find out: Ask them!  Start building relationships with your local banks NOW, whether you plan to borrow this year or not. You never know when that relationship will come in handy. Let’s move on, and I’ll give you some specific on exactly what your banker is looking for.

The 12-Digit Code You Need to Crack to Get Your Loan Approved

Remember: your lender needs to loan out money — you just need to get the safe open!

When an underwriter looks at your loan and is going to issue a “yes” or “no” verdict, they are going to want to make sure you have the right code. This code is the minimum requirements that they require in order to lend. Some of these requirements are set by the bank policy, others are set by the government. Others are simply set by the underwriter themselves. Getting your loan approved is as easy as correctly entering in the code.

Below are 12 digits in that code. Some banks may have fewer digits needed, while others may have more, but these 11 should get you started:

1. Property Type

Certain lenders only loan on certain types of property. So the first thing you should ask yourself is: will the lender lend on this kind of property? For example, if you are looking to purchase a commercial property but the lender you are talking with only loans on residential properties, you’ll see a door slam in your face. Trust me, I’ve been dealing with this.

2. Property Location

Typically, lenders have certain locations they will and will not lend in. Be sure that your lender is okay with the location of your property.

3. Property Condition

Many lenders will only loan on a property in great condition. Why? Because they want to ensure that the property can be sold if they needed to foreclose (and they want to make sure it is not dropping in value because of the condition). Therefore, be sure to check with your lender on what kind of condition they look for. Keep in mind, there are strategies for buying properties that need work, so don’t automatically rule out the fixer-upper.

4. Loan Amount

This is something I ran into often in my search for a loan over the past year. You see, the five-plex I am refinancing is a commercial property because it contains five units (anything over 4 is considered commercial). However, most commercial lenders have loan minimums and since I only needed $100,000 for the refinance, I heard a lot of “Nos.”

5. Debt to Income Ratio (DTI)

When buying a property, lenders want to know that you can afford it. To determine this, they use a ratio known as “Debt to Income” or “DTI.” DTI is a percentage number based on the relationship between your debt and your income. However, there are two different DTI numbers they care about, so let’s look at both:

Front End Debt to Income Ratio – Front End DTI is the relationship between how much your total housing payment will be and how much debt you have each month. For example, if your primary residence house payment will be $1000 per month and you earn $3000 in gross monthly income from your job, your current Front End DTI would be 33.3%, because $1000/$3000 = .33. For real estate investors trying to buy or refinance rental properties, this number is not as important as Back End DTI.

Back End Debt to Income Ratio – Back End DTI is the relationship between how much TOTAL debt you have compared to how much income you make. In other words: your total monthly debt payment divided by your total monthly income is your DTI. For example, if your total debt payment each month was $2000 per month and you currently earn $4,000 per month from your job (gross) your Back End DTI would be 50% (because 2,000 / 4,000 = .50).

Every lender has a DTI number they care about, and one of the most important things you can do to ensure your loan gets approved is ensuring you are below the threshold of what the bank likes to see. Typically, you probably want your Front End DTI to be less than 28% and your back end to be less than 36%. When checking with a lender on their DTI requirements, you will typically see these numbers in the following format: (28,36) [where the first number is the front end, second number is the back end.)

6. Loan to Value (LTV)

A lender’s primary concern is to “avoid risk.” To do this, they want to ensure that no matter what happens in the future, they will be okay.  If you continue to pay forever, they are happy with the interest. But if you stop paying, they want to know that they are not going to lose money. To ensure this, a lender wants to know that there is sufficient “equity” in the property to cover the costs if they need to foreclose on you and sell the home.  To gauge this, the lender relies on a percentage number known as Loan to Value, or LTV. The Loan to Value is a ratio between the total loan amount(s) and the properties fair market value.  In other words:

LTV = Total Loan Amount(s) / Fair Market Value

For example, if a property is worth $500,000 and you are looking to get a loan for $400,000, you are looking at an 80% LTV loan, because $400,000 / $500,000 = .80.

Lenders typically have different requirements for maximum LTV based on the property type. For example, for an owner occupied property using an FHA loan, the lender will go up to 96.5% LTV. However, on a commercial property, a lender may not want to lend above 50% LTV.

If you are an investor, you are likely to find 70-80% LTV the norm for investment properties.

One additional note about LTV: the LTV is calculated using ALL the loans that have a lien on the property, including 2nd or 3rd mortgages. The lender will likely add all these loans together to determine the LTV.

7. Credit Score

This one is pretty self explanatory, but banks want to know that YOU are trustworthy to lend money to so they generally have a minimum credit score that they want to see. This number will depend on the lender and the loan type, but if you are below a 600, understand that it can be difficult to obtain any kind of loan.

To check your credit score, I would recommend checking out, which allows you to see your score for free (Like… actually free. No free trial, no credit card required. They make their money by selling credit cards. Yes, kind of ironic.)

8. Repayment Source

Lenders want to ensure that your ability to repay the loan will stay consistent. To do this, they will dig in on your repayment source for the loan. For most borrowers, this means they will look into your job. They will want to know how long you have worked there for and how much you have historically made.

If you just started a new job, it can be more difficult to get approved than if you have had the same job for years. If you are a property investor, the lender will also look at your rental income and may be able to use that income to offset your debt. However, most lenders will not give you any credit for this income unless you have been a landlord for more than two years (remember: they want stability).

Additionally, no matter how long you’ve been a landlord, you likely will never get 100% of the rental income counted toward you. They will likely give you 70-80% just to be safe on their end.

9. Experience

Next, they may want to know your experience level. This is especially true on large, commercial or multifamily loans. Why? Because the bank knows that you will not be able to pay the payment if something goes wrong. If the mortgage payment on your new apartment complex is $30,000 per month, the lender knows that there is no way that you could pay that if all your tenants left. Instead, they’ll want to look at your experience level to make sure you have the skills to ensure a catastrophic event like that will not happen.

10. Cash Reserves

The lender will want to ensure you have the cash to weather any storm. Be sure to have at least some cash in a savings account before applying for your next loan. The amount will depend on the lender and how many properties you own, but every lender is going to want to see something.

11. Recent Credit Changes  

A lender wants to know that not only is the property going to be stable – but YOU are going to be, especially in regards to your credit decisions. For this reason, it’s important not to do anything crazy with your credit while trying to obtain a loan.

As lender Jeremy David Schachter of Pinnacle Capital Mortgage Corporation says, “What I always tell my clients, especially during the mortgage process, is keep on doing what you are doing when we initially got you pre-qualified. Don’t get tempted by the zero percent credit cards to furnish your home and with new appliances. Don’t change jobs, transfer large deposits into your account that can’t be sourced and don’t increase any existing debt, even after your credit is pulled. Lenders pull a refresh credit report as it is called right before you sign your official documents or close. If there is any new debt or an increase in your balances of existing debt, it could make or break your approval.

12. Compensating Factors

Lastly, understand that in the end, loan decisions are eventually brought to a real, live person, so there could be “compensating factors” if you fall short on a requirement or two. For example, if your credit score is a few points shy but the Loan to Value is exceptionally low, the lender may waive the minimum credit score requirement because the equity in the LTV compensated for it. However, there is no way of knowing exactly what your lender will or won’t do, so it’s best to simply try to fit your peg within their square box perfectly.

Now that you have a good idea of how a lender thinks, let’s talk about how to fit your loan into a package that a banker will be excited about.

Get Your Loan Approved By Making Your Lender’s Job Easier

Earlier in this post I mentioned that getting a loan approved is like a code. If you can get the code right, you can get the door to open.

That “code” was outlined above, but a code does no good if you can’t find the keypad.  In other words, you might know the 12 digits needed to open a safe, but if you don’t know how to punch those numbers in, those digits will be worthless. So let’s crack this safe together.

As I said before,  a lender WANTS to approve your loan.  The banker wants to say yes. The underwriter wants to say yes. So why do we hear so many “nos?”

Because people don’t enter the digits in correctly! So what’s the best way to make this process go more smoothly?  How do you get these digits entered correctly? Simple: Do the heavy lifting for your banker.

You banker has a LOT of loans going on at the same time. They are doing a car loan for Bill Johnson, a house refinance for Sally Wiggins, and a broom loan for Harry Potter. Therefore, a banker is likely going to take the path of least resistance and prioritize the loans that will be the quickest and easiest to enter in. So, if you want your loan to get approved and get approved quickly — do the heavy lifting for them, so their job is as easy as possible. You already know the 12 digits that the banker needs to enter, so write these out as detailed and “plain as the nose on their face” simple for the banker, and then provide documentation to back it up. When you speak with the front end banker, ask them for a list of all the items you will need to have. Likely, that will be:

  • Tax returns for previous 2 years
  • W2s for previous 2 years
  • Pay stubs for previous 2 months
  • A personal financial statement
  • Bank statements
  • Purchase and Sale documents for the property
  • Descriptions of all your properties
  • And probably more.

When the banker gives you this list, don’t think of it as a “wish list” but as a “must list.”  Your job is to compile this information in the most organized format possible. If there is one tip from this post you could remember it is this: there is power in presentation. Go overboard. Have fun with it! When I applied for the loan that was ultimately approved for my recent 5-plex refinance, I organized the entire packet in binder I bought from Staples, complete with a cover page, summary, photos, and divider tabs. There was nothing magical in this – but I simply gave him everything he wanted in the most organized way possible.

Furthermore, I ran this property through the BiggerPockets Rental Property Calculator and took the PDF report that it generated and included that on top of the organized packet. This enabled the lender, in one place, to see all the financials of the whole property.  Upon giving him the application, besides being blown away by it’s organization, he commented how nice it was to see that summary document. And within a few days I had a full loan approval. (If you are not using this calculator to apply for loans or analyze potential deals, you are really missing out. Check it out today at

Wrapping it Up

I can’t guarantee that you’ll always hear a “yes” from your lender. But I can tell you that if you don’t hear a yes, it’s because you either didn’t have the right code or didn’t punch it in correctly. Start thinking of the loan process like a safe to open – and the whole process becomes much easier and you’ll be able to finance far more properties.

About Author

Brandon Turner

Brandon Turner is an active real estate investor, entrepreneur, writer, and co-host of the BiggerPockets Podcast. He began buying rental properties and flipping houses at age 21, discovering he didn’t need to work 40 years at a corporate job to have “the good life.” Today, with nearly 100 rental units and dozens of rehabs under his belt, he continues to invest in real estate while also showing others the power, and impact, of financial freedom. His writings have been featured on,,, Money Magazine, and numerous other publications across the web and in print media. He is the author of The Book on Investing in Real Estate with No (and Low) Money Down, The Book on Rental Property Investing, and co-author of The Book on Managing Rental Properties, which he wrote alongside his wife, Heather. A life-long adventurer, Brandon (along with his wife Heather and daughter Rosie) splits his time between his home in Washington State and various destinations around the globe.


  1. Brooks Rembert


    Great article as always. One thing I’m unclear on though is the whole idea of getting credit for your rental income. I’m sure every lender is a little different, but is it as simple as calling them up and asking how much credit they give for rental income?

    Our current lender appears to only be giving us 70%, even though the place has been a rental, with W2 verification, for four years.

    Thanks again for your insight.

    • Brandon Turner

      Thanks for the comment Brooks! As for your question – yeah, you should be able to just call and ask. Most bankers will know and, if not, they can ask the underwriter. I think 70% is pretty normal, but I’ve found once you get to the commercial side of lending – this definitely doesn’t matter as much!
      Thanks again!

    • DP Patel

      My lender has asked directly to their underwriter about the % and I was told that they can go upto 75% for 1st year for specific property, until I file my tax return. Of course, all my investments are not older than a year.

  2. Carlton B.

    This should be required reading for anyone buying a house investor or otherwise. I have learned a lot of the things in this article but I learned by making a lot of mistakes. The two points that have found to be most important is finding the creative lender (they are easy to spot) and making the lenders job easy. I put a packet together with all the 8 things you recommended along with an explanation of my goals and shopped around and found my creative lender.

  3. Sean T.

    I worked in debt sales years ago now but can concur, lenders BEGGED us to find them new customers and wined and dined as needed. The key is to know if underwriting is a person or machine and how that affects the next step or actions you can take.

    Thanks for the article.

  4. Michael Buffington

    Great article. It always amazes me when others get upset with a banker for requesting information when a loan is being reviewed by an underwriter. I always go to my commercial lender with as much information as possible and organize it in a binder for them. If they ask any questions or request more information I respond promptly and honestly. Sell the lender on you and your property. If you have a deal that works it really is not difficult to get a loan from the right lender.

    • Brandon Turner

      I know! It sure can be frustrating but if you get them everything up front, you won’t have to worry about it as much. My banker was just telling me the other day that 90% of the delay in doing loans is because people are slow at supplying paperwork.

  5. J. Martin

    Great recommendation on making it as easy as possible by providing through information and documentation. I work in bank regulation and review real estate loan documentation and credit memos all the time, and it’s not just about how good the deal is. It really is about the presentation too and presenting the pertinent information in a manner that can be understood.

    Great blog post Brandon!

  6. Great article Brandon!

    It makes loan approval process look so easy. I especially enjoyed the step by step in plain English instead of some real deep real estate industry jargons that some writers use.

  7. Curtis Bidwell

    Brandon, Had you written this 2 years ago I would have saved a lot of frustration and anxiety! After working with a broker and going through over a dozen potential lenders (some more than once) spinning my wheels for 18 months, I finally did just what you suggested. I put together a company history, property profile, financials, tax returns, etc. printed out a nice color cover sheet and took it to Office Depot and had it nicely bound. The first bank I took it to did the deal!

    Great advise!

    • Brandon Turner

      Thanks Curtis – had I written this earlier I would have saved MYSELF a lot of frustration and anxiety! It’s one of the main reasons I write- to clarify things in my own head!
      And awesome to hear about your story with the lenders. I just did the exact same thing!

  8. Great article and wish I had read this before doing my first deal, as the lending was by far the hardest part of the whole process. I found that it was much more difficult the go through the process as an investor compared to a primary residence since there are more incentives to qualify homeowners for their primary residence, especially in a “distressed” area. Another experience that I am not sure is common or not was that I sensed lenders assumed that you knew what you were doing if you were going for a loan on an investment property. Turned out to be a bad assumption since I had to learn it all on the fly! That is too bad about needing 2 years of rental income to count for your DTI. I take this as another reason to keep a solid paying job and transition slowly and carefully before “taking the leap”.

  9. Richard Corns

    Thank you for sharing the importance of preparing a presentation for your loan officer and in particular the underwriter. Tell the story about the project your trying to fund. BiggerPocket colleagues should take this to heart and not do another thing until they put together their own presentation. Keep the financials current and just add to it as needed. I’m a private money broker and can almost guarantee that once you learn to structure your deals according to the lenders guidelines you’ll have a constant flow of funds. Sources other than Banks don’t give a hoot about your credit or how many properties are in your portfolio. In fact, Reputational Capital has more influence on their decisions than credit or bank account.

  10. Great article. The only thing I’d like to correct is this:

    “Repayment Source – Lenders want to ensure that your ability to repay the loan will stay consistent. To do this, they will dig in on your repayment source for the loan. For most borrowers, this means they will look into your job. They will want to know how long you have worked there for and how much you have historically made. If you just started a new job, it can be more difficult to get approved than if you have had the same job for years.”

    This probably varies a lot based on location but all some of them care about is that you have a job or 2-3 years worth of tax returns if self-employed. Those are the biggest deal breakers especially for us self employed folks.

    According to our mortgage broker, I can’t get a loan now because I don’t have 2 years worth of tax returns however if I went and got a job at McDonalds, they’d give me a loan after 2 pay stubs.

    I had asked another banker friend of mine in theory if I put down 80%, if they’d lend me the rest 20%. That’s 20% LTV and he said they wouldn’t. It’s pretty ridiculous but since most lenders simply sell the loans to Fannie, they follow the strictest guidelines even when it makes zero sense.

  11. Mary B.

    Good blog, Brandon. It’s a very imformative read. The only thing I see that may need some elaborating on is #2 Property Location. This may be the case with private lenders & HML but with commercial banking its known as ‘redlining’ and is illegal.


  12. Great post, thanks for the knowledge. One thing I just found out that I never hear about when applying for a loan is a public record search. The loan processor did this and found items as far back as 10 and more years ago and wanted a letter of explanation. I guess different states look for different items, but I have never heard of this being an item when going for a loan. Until recently.

  13. Ed France

    Hi Brandon.Great article. Some things refreshed I had forgotten about. I had used a mortgage broker for my deals as it may have cost me a few dollarsnit left my hands free to concentrate on other things. I found them to be very useful. Thanks for the article. Ed

  14. Brandon,

    As a banker for the last 20 years I would love to take this post and share it with my customers BEFORE they come to me to apply for a loan.

    The two things that I picked out from your post are to first make sure you are prepared with everything that your banker asks for. Don’t make them come back to you for more because it only slows down the purchaser and keeps buyers from getting into their home whether it’s for personal occupancy or an investment. Great point to help purchasers.

    The second piece that I would like to comment on is a relationship with your banker or bankers. As much as I would like to think all of my customers bank with just me I know they don’t. Many customers will have relationships with multiple bankers because each bank has different guidelines and although bank A may do the first loan for you they may not do loan B because for one reason or another the property for loan B doesn’t fit all of the requirements of the bank. Don’t bank with a bank, bank with YOUR banker. Quality relationships with your banker will go a long way.


  15. Roy N.


    Good article. We maintain a thumb drive which contains our corporate information (annual reports, tax returns, budgets, etc) and the necessary personal information for all shareholders/partners.

    It also contains a status report on each of our existing properties (i.e. how each is performing, recent CAPEx, recent appraisal and remaining balance of current mortgages). We even through in the most recent CMHC Rental Market Reports along with our analysis of the property we are seeking to finance.

    Though DTI is handled a little differently up here – many lenders look at total household debt to income in addition to the DTI of the applicant – the basic process is the same. It never hurts to make your bankers life easy … it makes them look forward to your next property.

  16. Thank you for the article. The follow up question I have is specific to myself hopefully you can at least give me a recommendation of where to research if I can get a loan. I would like to purchase a multifamily property 12 or units or bigger 800k-1.2 after an exchange + savings and will be able to put down 25% or 30%. Here is the deal I don’t make that much about (3k per month 1k goes to mortgage on my house) the rental income I have made in the past has been written off (depr etc.). Is their a formula that I can use to give me a ballpark on what I can expect to receive on a loan. I know I don’t currently make enough to cover a large property investment from my work income. Another problem I maybe that I was a passive partner in the property I will be selling and now want to go solo.

    Thank you so much for any feed back,

    • Brandon Turner

      Hey Eric, I don’t think there is any good ballpark on that info, but a commercial lender won’t care as much about your lower income level- as long as the property cash flows well! I would strike up that conversation with a few banks right now.

  17. Blake C.

    Does anyone have an example of a file they have used as their portfolio to present to lenders? Clearly I don’t want to see your personal info, but would love to get the feel of what it could/should look like without reinventing the wheel.

  18. Jennifer T.

    On my first home purchase (duplex), I was fortunate to have a somewhat creative banker who really held my hand through the process. My credit was okay (mid 600s), but not great, so that was a challenge. Here are two things I found surprising:

    1) Although the house I wanted to purchase was half of what I qualified for (not including rental income), because it was a multi-family, I was required to put 20% down instead of the more typical 5%. For example, if it had been the exact same house but a single family home, I could have just put 5% down. It seemed so crazy to me that a home I was well qualified for required a larger downpayment, because I would have the ability to actually EARN money with it. But the reasoning I was given is that multi-family properties have a higher rate of foreclosure, so the standards are more stringent.

    2) My banker had some kind of program where he was able to tell me exactly how much I should pay down on each of my credit cards to maximize my credit score. The surprising part? It wasn’t paying off each balance in full. Most of the cards showed my max. credit score would result from leaving a small balance on each card (under $20/each).

  19. Karen Schimpf

    Interesting comment, “Lenders need you more than you need them.” I would have agreed with that statement prior to 2008, you could have been dead and you could have gotten a deal closed. After 2008, loan officers had to be creative to get deals closed. Obviously in the last couple of years more lenders are coming back into the market. But that being said, the borrower still needs to demonstrate their strengths of why a lender should lend to them.

    What I like about your article Brandon is that it helps the borrower understand they need to have their ducks in a row so they can show the lender that they are viable borrowers. I’ve read some of the comments above and it is sad the their loan officer didn’t bother to guide the borrower through the application process so they could get their loan approved.

  20. DP Patel

    Great article, Brandon. Good to know the inside of the loan process. Specially, I liked the “Power in Presentation” part, which I have started working on that but never thought that it can be used for Lender. I will have to work on that wrt to Lender and make it very clear presentation for each proprty. Thanks again for a great info.

  21. Great article Brandon, thank you for the insight – hoping you guys can shed some light on our current situation and let me know what options, if any we have available at this time. The long and short of it is that we went through a short sale on our primary residence in February 2012 and have been working diligently since that time to save $ and restore our credit.

    We purchased our first investment property in May 2013 with cash that we now own free and clear. I am looking to refinance the property using a HELOC to pull some cash out to reinvest but have had no luck finding a lender willing to work with us due to the lingering short sale on our record. We have been told that based on the current laws regarding short sales/ foreclosures we now have to wait a minimum of 4 years from the short sale closing date to be eligible for any kind of new loan even though it would appear we are a solid candidate for a loan based on strong credit scores, W2’s, tax returns, D/I ratio etc.

    Thank you for any advice or insight you may have on this subject and Happy Holidays to you ALL!

  22. Kevin Kimble

    Hey Brandon,

    This is beyond excellent!! Along with the many comments from the community. As a 1st time homebuyer looking to take the plunge on a (hopefully) 4 unit property, the information provided here will bless me for the rest of my life. You don’t get information like that everyday! As a 1st time homebuyer looking to start of immediately as a landlord, I’M GOING TO NEED A LOT OF ASSISTANCE! lol!!! That is what I know I have here.
    Thank you so very much Brandon on behalf of all us “newbies”!!!

  23. Aaron T.

    This post came just in time for me. I am looking at getting financing on a 2-unit property with 15% down. Most places I have talked to wont do it, but I did find one lender that said they will.

    With this information I can ask the right questions before I submit all my information to make sure the front end guy is not just saying “yes we can”, when in reality underwriting may not do it.

    I am now prepared to ask what percentage of multi family loans have they done and how many were approved at 15% down. Additionally, all the other 11 above mentioned questions.

    This will help vet this is the right lender for my need and save us time and extra work if they are not.

  24. veronica perez

    Thanks so much for all this information is really helpful We have an appointment with the bank this week and I was thinking what should we bring? what should we say ? …. Now I know we have to prepare very well hopefully the appointment goes well!! Thanks again !!!

  25. I was just going to read a quick post.
    You guys aren’t playing fair, This deserved its very own post. To be honest I don’t remember what the article I was reading was about because this related article took center stage.
    I love the way this was presented, I kept thinking about my poor bankers who have helped me more navigating through my never normal needs and me knowing that they can’t do most of the things I want them to do. They have been really good at trying to get me to understand everything that you just wrote,
    You did a great work here, I may have to apologize to some bankers for trying to bend the only rules that I can understand now are pretty much in concrete.

  26. Patrick Sullivan

    Hey Brandon! Great article as ALWAYS! The only questions of mine were “What if I need to use a partner to fund the money down (because, much like you starting out, I am currently ‘working broke’?” AND “Particularly in the case of wholesaling, how would I go about doing the leg work for my cash partner as well as providing the bank/lender a clear, concise and doable business plan/strategy of the deal(s) me and/or my partner do?”

  27. Andrew Nissen

    1. Awesome post again Brandon!

    2. Since I depreciate and expense everything I don’t show much positive income from my 12 rentals. Does an underwriter usually understand this?

    3. Any suggestions for help with improving financial organization? This is not my strong suit. Bookkeeper? Virtual assistant? Other?

    4. Goal is to expand/scale up (10X +) in next few years.

    Thank you,

  28. This article is amazingly helpful, thanks for sharing your personal insight! My husband and I are planning to get a loan for the first time in our lives. I\’m glad you mentioned two things that are needed to be accomplished. I will keep that information in my mind for sure. I am going to share this with my husband too, so he knows what we need to do to get a loan!

  29. Ted Fossett

    I really like the “loan presentation” advice. I was going to call a mortgage broker tomorrow to get these kind of “what will I need?” questions answered, but now I’ll get my presentation folder together first. Thanks for that great tip and for the general parameters that the underwriter will use.
    I bought 5 houses in the 90’s by plunking down $1,500 on 3bdrm/2bath homes and assuming the non-qualifying assumable loans, but as a general contractor I’m not starting from scratch again (thanks to the 2007-2012 recession), and that sweet trick from 1991 wont fly anymore. Hopefully, through this website I can find a low-down-payment-buy-and-hold strategy pretty quickly and get going in this exciting realm again!

  30. James Gorman IV

    Superior Blog Post & Presentation

    Have you every wondered why underwriter appear to be incapable if rational thought ?

    I’ve spent hundreds of hours answering immaterial questions, waiting for the check service to confirm the IRS tax data I provided is actual, even thought it’s a crime to falsify reports presented in federal guaranteed loan application, had a major TO BIG TO FAIL bailed out bank say they would not credit more than 25% of long term rental income toward gross income, etc., etc. The banking industry sure seems to working of a federally imposed checklist.

  31. Stephen Zipp

    THIS is the article I am looking for! Just about to dissolve my LLC with my partner and step out on my own and have been wondering about better ways to finance a deal then throw all of my money in and hope for a “yes”. I assure that I took notes while reading this. Thanks for the great info!

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