Turned Down for a Home Loan in California? Get a Second Opinion!

In this guide: How a second opinion from a mortgage broker could help you qualify for a home loan in California, even if you’ve been turned down by a traditional bank or lender.

We often think of the second opinion as it relates to things like car repairs and dental procedures. But this concept applies to the mortgage lending industry as well.

Different lenders have different standards for mortgage loan qualification, and different methods for determining risk. So it’s possible for a home buyer or homeowner in California to get denied by one mortgage lender and approved by another—even when their qualifications haven’t changed.

Working as an intermediary, a mortgage broker can contact multiple lending partners on your behalf. This second opinion can increase the chance of finding a lender that’s willing to offer financing, even if you’ve been turned down by another California lender.

Traditional Lender and Mortgage Broker Differences

Borrowers in California who have trouble qualifying for a mortgage loan often find success by working through a mortgage broker. If you’ve been turned down for a home loan in California, you should consider getting a second opinion from a broker like us.

Here are the key differences between a traditional lender and a mortgage broker, and how they relate to you as a borrower:

The Traditional Lender

A traditional lender, such as a bank or credit union, directly originates and funds mortgage loans. These lenders have their own set of mortgage products and underwriting guidelines. As a borrower, you would apply for a mortgage directly through the lender and work with your loan officer throughout the application process.

But you’ll only have access to the loan products or programs offered by that one lender—and those options might be limited.

The Mortgage Broker

A mortgage broker acts as an intermediary between borrowers and multiple lenders. Brokers do not lend money directly. Instead, they work with a network of lenders to find suitable loan options for their clients.

Here at Bridgepoint Funding, for example, we have access to a wide range of mortgage products from various lenders. This means we can offer more options to our clients, including those who’ve had a California home loan declined in the past.

Mortgage brokers can also advocate for their clients, negotiating with lenders on behalf of the borrower to secure favorable terms and rates. They can present the borrower’s case to lenders in the best possible light, highlighting the borrower’s strengths, compensating factors, etc.

Borrowers Who Can Benefit From a Second Opinion

To expand on this point, here are some scenarios where a person who is turned down by one lender might find success working with a California mortgage broker.

1. Self-employed Individuals

Self-employed borrowers—such as freelancers, consultants, or small business owners—can benefit from working with a mortgage broker. Traditional lenders sometimes turn these borrowers away due to the type of employment or a lack of documentation. A mortgage broker, on the other hand, can often find specialized loan programs well suited for self-employed borrowers.

2. Non-Traditional Income

California home buyers who earn income from sources beyond traditional employment (such as rental income, investments, or royalties) sometimes get turned down by traditional lenders. A mortgage broker can help identify lenders willing to consider diverse income streams, with loan programs that offer flexible underwriting options.

3. Student Loan Debt

Young professionals in California with a lot of student loan debt may struggle to qualify for a mortgage through conventional lenders, especially if their debt-to-income ratio is high. A mortgage broker can explore alternative loan programs or down payment assistance options to help recent graduates achieve homeownership.

4. Limited Credit History

Individuals with limited credit history, such as recent immigrants or young adults, sometimes get turned down for home loans through the “big banks.” This is often due to an overreliance on credit scores as a risk-assessment tool. A California mortgage broker can help to identify lenders who consider alternative credit data or offer specialized programs for borrowers with “thin” credit files.

5. Contract or Seasonal Employees

Borrowers whose income is based on contract work or seasonal employment often have a harder time demonstrating stable income to traditional lenders. A mortgage broker can identify lenders that are more familiar with irregular income patterns and willing to evaluate the borrower on a broader timeframe.

6. Past Credit Issues

Borrowers with previous credit issues including bankruptcies, foreclosures, or debt collection often get turned down for home loans in California. But alternative financing options exist for these credit-challenged borrowers, and a mortgage broker can help you explore those options.

7. Larger ‘Jumbo’ Loans

Banks and traditional mortgage lenders sometimes shy away from “jumbo” or super-jumbo home loans for high-value properties. As a California mortgage broker based in the Bay Area, we frequently work with such borrowers and are able to secure the necessary funding. If you have sufficient income, a multi-million-dollar mortgage is doable.

8. Complex Refinancing Scenarios

Homeowners with complex financial situations who want to refinance their mortgages can encounter challenges with traditional lenders. A mortgage broker can assess the homeowner’s refinancing goals and recommend suitable loan options from a variety of lenders.

These are just a few of the scenarios where it might make sense to get a second opinion for a California mortgage loan. The point is, you should never give up just because you’ve been turned down by one lender. A mortgage broker could help you find an alternate path to homeownership!