Contigo Realty

Can't Qualify? Phoenix/Scottsdale Owner Financing may Open Some Doors

Home lending standards are the tightest they've been in years. In hard hits area like Phoenix, where many homeowners have suffered recent foreclosures, it's tough to qualify for new home loans using traditional lender financing. Necessity breeds solution, however, and one solution to consider is owner financing.

It’s not new. Owner financing was very popular in the West and Southwest during the 1980s and early 1990s, and it's poised to make a huge comeback.

Why Buyers Can’t Qualify

Underwriters carefully examine whether a potential homebuyer has the ability to repay the loan. In today’s market, buyers need higher credit scores and bigger down payments to qualify for conventional funding.

Fico credit scores take into consideration credit payment history and borrowing capacity. Scores range from 300 to 850. A score of 750 and above is excellent. A score of 620 to 650 is considered high risk. Any score below 620 is not good. While different loan programs require different down payments, conventional loans are definitely moving toward increasing down payment minimums.

Here are some common red flags that may make it hard for you to qualify using traditional lenders:

• Bad Credit
• No Credit
• Recent Foreclosure
• Recent Short Sale
• High Debt-to-Income Ratio
• Small Bank Deposits


You'll have a harder time than ever if you are self-employed. Stated income loans are a thing of the past. Lenders demand that you prove your income. For self-employed borrowers, this usually translates to using a minimum of two years of tax returns and other schedules to verify your net income.

Problems often arise when tax write-offs dramatically decrease income. Lenders must now look for other independent income sources or assets that can be used to pay your mortgage and other financial obligations.

It’s not uncommon for a business to have a bad year, but if you did, lenders will delve deep into your past accounting records. They may be willing to excuse one bad year if you have a track record of success in previous years, but they’re not likely to overlook several bad years.

If you’re newly self- employed, banks want to see a record of steady employment prior to the establishment of your own business.


There are many Phoenix and Scottsdale homeowners anxious to sell their homes at a good price in this down market and just as many anxious buyers who can’t qualify. This is where owner financing can benefit both buyer and seller. Owner financing offers potential buyers an alternative way to buy a home when they can’t qualify for traditional financing.

What IS Owner Carry? In short, owner financing, also referred to as “owner carry,” means that the homeowner acts as the bank and finances your purchase.

There’s not much room for negotiation with conventional lenders, but owner financing is a whole different ballgame. It allows buyers to possibly negotiate some of the terms of their contract such as down payment, interest rate, and monthly payments.

There are many advantages for the buyer including easier qualification, fewer costs traditionally associated with conventional financing (i.e. origination fees, points, appraisal fees, etc.) and fast closing.

If owner financing is a route you’d like to consider, contact us today to learn more about this exciting opportunity. We look for homes where the seller has indicated that owner financing is available. These types of opportunities are available in most price ranges in the Phoenix area.

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Though not guaranteed, information and statistics in this article have been acquired from sources believed to be reliable.

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The Fair Housing Act prohibits discrimination in housing based on color, race, religion, national origin, sex, familial status, or disability.

Information Deemed Reliable But Not Guaranteed. The information being provided is for consumer's personal, non-commercial use and may not be used for any purpose other than to identify prospective properties consumers may be interested in purchasing. This information, including square footage, while not guaranteed, has been acquired from sources believed to be reliable.

Last Updated: 2020-08-11 16:13:02