When the bank says no

What exactly did the bank say no to?

Generally one item in the file that does not fit that lender's rules, not a judgment about you.

There are broadly four reasons: the income could not be calculated, the ratios were over, the credit history, or the property itself. The letter rarely says which. Call back and ask. Most advisors will tell you, and that one sentence is worth weeks.

What are the usual sticking points?

Income calculation, debt ratios, the stress test, credit history, the source of the down payment, and the property type. That is most of the list.

Self-employed and dividend income usually fail on the calculation. Car loans, lines of credit and loans you co-signed usually fail on ratios. Down payments usually fail on documentation. The stress test qualifies you at a rate higher than the one you would actually pay, and that is an industry-wide rule, not that bank picking on you.

What if you have assets but thin income on paper?

There are approaches built for that, and they lean on the assets and the down payment rather than the tax return.

The common ones: increase the down payment until the loan is small enough for a different tier of lender, use rental income from a suite, use documented business accounts instead of personal returns, or add a co-borrower. Some lenders have specific policies for applicants with substantial net worth, under different names and terms. Which one fits depends on what the assets are and how liquid they are.

If you apply at another bank, will it just happen again?

If the sticking point has not changed, probably.

So the order is: find the reason first, then pick the next lender. The same issue carries different weight in different places. Some lenders are relaxed about self-employment and strict on credit, some are the reverse. Applying everywhere at once is the expensive approach: every application adds a hard inquiry, and it burns time you may not have.

What does it mean when the property is the problem?

It means the lender will not take that particular property as security. It has nothing to do with your income or your credit.

Common versions: the appraisal came in under the purchase price, the unit is very small, it is a pre-sale, the strata has a history of water damage or a large special levy, there are rental restrictions, an older wood-frame building, or a property with commercial use. In Vancouver this happens more than people expect. Changing lenders often solves it, because tastes in property vary widely.

When does an alternative or private lender make sense?

When the clock is short, or when nothing in the mainstream tier fits right now, and only with a specific date to be out.

The cost has to be said plainly: a higher rate than a mainstream lender, generally a lender fee and a broker fee, and a short term. Private lending is shorter and more expensive again, sometimes interest only. It buys time, it is not a solution. Before signing you should already know what gets you out in a year: filings caught up, credit repaired, or a sale. Without that answer, do not sign.

The subject removal date is days away. Is there anything left to do?

Sometimes, but it has to start today, not tomorrow.

The usual moves are asking for an extension, submitting to several lenders that can turn around quickly, and adjusting the down payment structure where that helps. Anything touching your deposit or breaching the contract is a legal question for your lawyer and your realtor, and I cannot answer it for them. In this situation, phone me. Do not email and wait.

Three things you can do this week

First, call the bank back and ask one specific question: was it the income, the ratios, the credit, or the property? Most advisors will tell you. That single answer decides everything after it.

Second, do not submit anywhere else until you know the reason. Third, keep everything from this application: the appraisal, the list of conditions, every document you handed in. The next lender can usually reuse it, which means you are not starting over.

Common questions