Opportunities for workers in the cannabis industry to become homeowners are starting to crop up.
In mid-April, Paramount Residential Mortgage Group announced the expansion of its non-qualified mortgage program to allow employees and business owners in the medical or recreational cannabis industry to apply for a loan. Amounts that borrowers can qualify for range between $75,000 to $3 million.
"The program allows for self-employed individuals in the cannabis industry to take out a loan to buy or refinance the home of their dreams in states where cannabis is legalized and the business is licensed accordingly," the lender said in its announcement. Currently, 38 states allow for the recreational or medical use of marijuana.
According to Paul Jones, director of non-QM business development at KPMG, the program opens up a door for people "who have been on the sidelines of lending for various reasons."
"Our prime product offering, which is called choice stretch prime, was recently updated to allow self-employed individuals in the cannabis industry to apply using bank statements," he said. "Furthermore, people who may be employed in that industry can utilize their W-2 earnings from cannabis income or 10-99 income."
Most non-QM loans require a 10% down payment, Jones said, but mortgage insurance is not mandatory. As a result, the interest rate on such loans is higher than conventional products.
As states have moved to legalize medical and recreational cannabis, the Corona, California-based lender has seen requests for this type of product increase, Jones said.
"The challenge has always just been where's the money and how are they demonstrating it," he said. "With our product, we're going to check [these borrowers] and look over financials just like any other applicant. We will apply the same rules around the way we look at cash flow for bank statement customers and what those deposits should look like."
But borrowers in the cannabis industry whose income is mainly in cash are out of luck. PRMG won't be able to use cash deposits to qualify a borrower.
"It would have to be through some sort of merchant processing technology," Jones said. "So it would have to be your Square or PayPal, anything that is tied to that business that we can see."
At the moment, only a few other lenders have launched similar programs. Housing agencies, including Fannie Mae, Freddie Mac, do not purchase these types of loans, mainly due to the fact that cannabis hasn't been legalized on a federal level.
