Lender denied loan on the day of closing

Investor · IN · Member since 2019 · 38 posts · 24 votes

This is more of a vent post. Went with a major online lender on this one, I'm sure you've heard of them. They denied me the day we were supposed to close. It's a 4-unit with a DSCR over 2!!! Their loss, but definitely a harsh reminder of how important your network is.

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Steve K.

Realtor · Boulder, CO · Member since 2016 · 3k+ posts · 5k+ votes

5mo

This is why we don't recommend "major online lenders". Lesson learned. I've had similar issues that's why as a listing agent I caution sellers about accepting offers from buyers using major online lenders. I have even countered offers asking buyers to switch to a lender I trust. Name the lender so others know to avoid!

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Doug SmithPro Member
Lender · Tampa, FL · Member since 2013 · 2k+ posts · 2k+ votes
5mo
What reason did they give? Was it something they knew about up front?
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Matthew CrivelliBusiness Member
Lender · MA · Member since 2021 · 1k+ posts · 1k+ votes
5mo
Quote from @Camden Lowrance:

This is more of a vent post. Went with a major online lender on this one, I'm sure you've heard of them. They denied me the day we were supposed to close. It's a 4-unit with a DSCR over 2!!! Their loss, but definitely a harsh reminder of how important your network is.
What was the reasoning for them pulling back?
[email protected]413-348-8346
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Camden Lowrance
OP
Investor · IN · Member since 2019 · 38 posts · 24 votes
5mo
@Matthew Crivelli @Doug Smith
Sorry, I definitely should have included the reason.
The lender flagged the loan as owner-occupied because the appraiser marked it that way. It was an error and they wouldn't budge on changing it. I absolutely do not live there.
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- Erik EstradaBusiness Member
  Lender · Member since 2022 · 6k+ posts · 1k+ votes
  5mo
  Quote from @Camden Lowrance:
  
  @Matthew Crivelli @Doug Smith
  Sorry, I definitely should have included the reason.
  The lender flagged the loan as owner-occupied because the appraiser marked it that way. It was an error and they wouldn't budge on changing it. I absolutely do not live there.
  
  That's interesting. Did you provide a lease agreement and proof of rent payment? Maybe a utility bill, insurance bill, and ID to match your primary address? I have never heard of a lender flat out declining a loan due to the appraisers mistake. Usually the underwriter will request proof of primary residence. If you have the appraisal completed within 90 days. you might still be able to transfer it!
  [email protected]818-269-7983
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- Nate HerndonPro Member
  Lender · Springfield, MO · Member since 2023 · 277 posts · 195 votes
  5mo
  Quote from @Camden Lowrance:
  
  @Matthew Crivelli @Doug Smith
  Sorry, I definitely should have included the reason.
  The lender flagged the loan as owner-occupied because the appraiser marked it that way. It was an error and they wouldn't budge on changing it. I absolutely do not live there.
  
  That's not a reason for denial, it's just something that needs to be caught by the underwriter and adjusted by the appraiser/appraisal management company. Sorry to hear that that happened, and so late in the loan process.
  I see appraisers accidentally mark "owner occupied" all the time on appraisals for my investor clients. We request the change through the AMC, it gets marked "tenant occupied", and it's an easy fix.
  [email protected]417-605-2196
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Doug SmithPro Member
Lender · Tampa, FL · Member since 2013 · 2k+ posts · 2k+ votes
5mo
One of our loan officer had that same issue not long ago. I had to jump in help our MLO. Do you currently own your primary residence? If you do, is that primary residence larger and nicer than the property you are attempting to purchase? Are you living in the property now? If you can make a case that it's non-owner occupied they should be able to work around it. One thing you don't want to do is to spike the football if you feel your right. The appraiser and underwriter will just dig in their heels even if they realize they are wrong. You have to leave them an option to update the appraisal in a way that saves face for them and doesn't embarrass them. Also, can you switch lenders if you're not getting anywhere with it?
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Account Closed
Member since 2026 · 16 posts · 4 votes
5mo
if the deal is salvageable, it's worth saving, your call. Yes, having the right broker is worth a lot.
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Stacy RaskinBusiness Member
Lender · Member since 2022 · 1k+ posts · 513 votes
5mo
That is pretty unusual to have the loan denied because of the appraiser's mistake. If you do have proof of living elsewhere and this lender won't do the loan, there are other DSCR loan options. Happy to connect to discuss further.
[email protected]818-770-0340
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J CastroBusiness Member
Lender · Florida · Member since 2025 · 705 posts · 253 votes
5mo
That’s incredibly frustrating — especially when it comes down to something that should’ve been easily fixable.

An appraisal mislabeling occupancy is not uncommon, but a lender refusing to correct it at the closing table is the real issue here. That tells you it wasn’t just the appraisal — it was a lack of flexibility (or willingness) on the lender’s side to actually solve problems when they come up.

If they truly wanted the deal done, there were multiple ways to handle it:
- Request a revised appraisal or correction from the appraiser
- Accept a letter of explanation + supporting docs (lease, utility bills, etc.)
- Push it through with a condition prior-to-funding instead of killing the deal
The fact they didn’t pursue any of those options is a red flag.
Also, to @Doug Smith and @Matthew Crivelli point — this is exactly why that question matters. If it’s something known upfront, it’s one thing. But a last-minute technicality like this? That’s a process breakdown.

@Camden Lowrance, you nailed the takeaway — your lender matters just as much as the deal. A DSCR over 2 on a 4-unit should not be dying over an occupancy checkbox.

If anything, this is a good reminder for everyone here:
- Always review the appraisal carefully before final approval
- Get clarity on how the lender handles appraisal disputes/revisions
- And like you said — build relationships with lenders who can actually think through a deal, not just follow a checklist
That deal is still solid. With the right lender, it should get picked up and closed without much issue. If you’re still looking for a solution, I’d be happy to connect and take a look — this is something we can likely get resolved with the right approach.
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Kyle HendricksPro Member
Lender · Member since 2021 · 170 posts · 74 votes
5mo
Unfortunately a lot of the time this is what you get with online lenders. Who you work with matters.
Realtors and lenders who you can build a relationship with over time and understand investing / invest themselves are always the way to go in my opinion.
[email protected]253-355-0247
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Steve K.
Realtor · Boulder, CO · Member since 2016 · 3k+ posts · 5k+ votes
5mo
This is why we don't recommend "major online lenders". Lesson learned. I've had similar issues that's why as a listing agent I caution sellers about accepting offers from buyers using major online lenders. I have even countered offers asking buyers to switch to a lender I trust. Name the lender so others know to avoid!
4 Reply
- Camden Lowrance
  OP
  Investor · IN · Member since 2019 · 38 posts · 24 votes
  5mo
  Quote from @Steve K.:
  
  This is why we don't recommend "major online lenders". Lesson learned. I've had similar issues that's why as a listing agent I caution sellers about accepting offers from buyers using major online lenders. I have even countered offers asking buyers to switch to a lender I trust. Name the lender so others know to avoid!
  
  Kiavi, wasn't the first time I've had issues with them at closing either. Fool me once...
  1 Reply
- Robin SimonBusiness Member
  Lender · Austin, TX · Member since 2022 · 5k+ posts · 4k+ votes
  5mo
  Quote from @Camden Lowrance:
  
  Quote from @Steve K.:
  
  This is why we don't recommend "major online lenders". Lesson learned. I've had similar issues that's why as a listing agent I caution sellers about accepting offers from buyers using major online lenders. I have even countered offers asking buyers to switch to a lender I trust. Name the lender so others know to avoid!
  
  Kiavi, wasn't the first time I've had issues with them at closing either. Fool me once...
  
  Kiavi is really bread and butter on hard money but their DSCR has been known to be lacking, its a bit of an extra effort, but splitting hard money with them and then a better DSCR lender for the BRRRR refinance is probably the best bet if you have the stomach and time for two lenders
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Matthew Bernal
Investor · Austin, TX · Member since 2021 · 497 posts · 127 votes
5mo
DSCR over 2 on a 4-unit doesn't get denied because of the deal that's a lender overlay problem, not a you problem.

Is the deal still on the table? Large online lenders have rigid program boxes and day-of denials on strong deals usually come down to something administrative that another lender can work around.

DM me what happened and the deal basics. I work with 4-unit DSCR loans and can tell you fast if this is saveable.
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Robin SimonBusiness Member
Lender · Austin, TX · Member since 2022 · 5k+ posts · 4k+ votes
5mo
Quote from @Camden Lowrance:

This is more of a vent post. Went with a major online lender on this one, I'm sure you've heard of them. They denied me the day we were supposed to close. It's a 4-unit with a DSCR over 2!!! Their loss, but definitely a harsh reminder of how important your network is.

What was the reasoning given for the denial?
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