On paper, this deal looked like a quick denial.
The situation
Jonathan had a lot of equity in his home but was having trouble obtaining loan approval. He was on a fixed-income in retirement and needed to consolidate his debt to free up some monthly cash-flow.
Why it broke
Jonathan’s home was a HUD-code manufactured home (often referred to as a modular or doublewide on land).
His qualifying credit score was under 620.
His home was purchased via land contract.
The fix
We structured the deal as an FHA loan, since conventional guidelines do not allow cash-out refinances on land contracts.
Although his scores were under 620, the overall risk profile met FHA automated underwriting requirements due to equity, stable fixed income, and acceptable payment history.
An engineer’s report and appraisal were ordered to ensure we met FHA collateral requirements, and the borrower was able to close and save over $500 per month in his monthly budget.
The lesson
Low credit scores are not automatic deal-breakers when compensating factors are present.
Manufactured homes often require additional documentation, but they can be strong collateral when properly evaluated.
The takeaway
If a deal doesn’t fit cleanly in one lending box, it doesn’t mean it’s dead. Sometimes the solution is simply having access to more than one path.