For many would-be homeowners, obtaining a mortgage or buying a house can be an exciting and daunting process, but for some with business interests, the question of how their loans affect the process may be at the top of their minds. The short answer is that if you have taken out a small business loan from the Small Business Administration (SBA), your chances of getting approved for a mortgage should not be affected.
Does SBA Loan Affect Buying a House?
If you want to buy a house and have an SMB loan, your chances of getting approved for a mortgage should not be affected. Usually, business loans like SBA do not typically show up on your credit report because credit bureaus will not use your social security number in that case.
The primary benefit of an SBA loan is that it is not recorded on your credit report unless the bank reports it as personal lending to the credit bureaus. This means that you don’t necessarily know about your small business loan when considering your application for a home loan. There are, however, some important considerations to bear in mind if you are interested in applying for both types of finance.
First and foremost, even though SBA doesn’t usually appear on credit reports, it will still need to be declared during the application process and thus could influence the outcome of your mortgage application. It’s, therefore, essential to ensure that all debts are disclosed to any potential lender or broker so they can consider them as part of their assessment criteria. Some lenders may be more lenient than others when taking on additional debt. It’s worth researching before applying.
It’s also essential to remember that while SBA loans do not typically appear on personal credit reports, they still require borrowers to guarantee them personally. If you fail to meet payments or other conditions associated with the loan, you could find yourself liable for any losses incurred by the lender.
Please read our article about SBA Loan Status Disbursed Current. Additionally, learn more about Bankruptcy Clear SBA Loans!
Finally, although SBA shouldn’t generally impact your ability to get approved for a mortgage if you have taken out one recently, this could still influence your ability to secure financing depending on how much new debt you have accumulated since taking out the loan and what other financial commitments you might have made since then It’s always best practice to speak with an experienced advisor before applying for any financial product to understand what is likely and achievable under current market conditions and in light of any existing commitments or debts you might already have outstanding.
In conclusion, while having an SBA shouldn’t directly affect whether a person gets approved for a mortgage, it’s essential for anyone considering both types of finance products to understand their commitments and declare all debts accurately when assessing their options. This could potentially impact both applications either positively or negatively, depending on individual circumstances.
After leaving Wells Fargo Bank in 2014, Daniel began a career as a finance consultant, advising companies and individuals on economic policy, labor relations, and financial management.
At Promtfinance.com, Daniel writes about personal finance topics, value estimation, budgeting strategies, retirement planning, and portfolio diversification.
Read more on Daniel Smith's biography page.
Contact Daniel: daniel@promtfinance.com