Will a Merchant Cash Advance Affect Getting a Mortgage?
It can. Mortgage underwriters look at your personal debts, your income and, for business owners, your business's finances, so an active advance with a personal guarantee or a strain on your business cash flow can show up in the review.
How do mortgage underwriters see business owners?
Self-employed borrowers usually qualify on tax returns rather than pay stubs. The underwriter looks at business income, often over a couple of years, and at the business's stability. A new advance that reduces profits or signals cash strain can affect how the income is read.
Does a personal guarantee show up on a mortgage?
Most advances include a personal guarantee. Whether a mortgage company counts the guarantee as your debt depends on its guidelines and how the business is paying. Some ignore guarantees on business obligations the business is paying on time. Others ask about them.
Will the MCA credit check affect your mortgage?
A funder's credit check can appear on your personal report. A hard inquiry can lower your score slightly for a while. If you're about to apply for a mortgage, ask what kind of check a funder will run.
How should you time an advance around a mortgage?
If a mortgage is coming up, the cleanest approach is to avoid new financing in the months before and during the mortgage application. If you need business funding, talk to your mortgage broker first so there are no surprises in underwriting.
Does a paid-off advance still matter?
A completed advance with a zero balance letter is rarely a problem. It shows up as history, not an active obligation.
Which records should you keep ready?
Mortgage underwriters ask for explanations of anything unusual in your finances. Have your contract, payment history and any payoff letters on hand.
What's Afterfirst's advice?
Don't take on business funding just before applying for a mortgage if you can avoid it. If you can't, be upfront with both sides.
Should you refinance your home to pay off an advance?
Some owners consider taking cash out of their home to pay off an advance. It can lower the cost, but it moves a business obligation onto your house. If the business struggles later, your home is on the line in a way it wasn't before. Think hard, and talk to a financial advisor, before making that trade.
When can you take business funding after closing?
Once the mortgage is closed, business funding rarely causes issues with it. Just keep paying the mortgage as agreed and keep business obligations in the business.
Why be honest on both applications?
Mortgage applications and funding applications both ask about your debts. Answer both truthfully.
How can Afterfirst help with this?
Call 877-FUND-654 if you're weighing business funding and a mortgage at the same time. We'll talk through timing and which of our options puts the least strain on your personal file.
What else do owners ask about this?
- Does my spouse have to sign the personal guarantee on an MCA?
- Does a merchant cash advance build business credit?
- How do I build business credit for my small business?
More short answers on this topic are on the credit and liens FAQ, and the MCA apr calculator runs the numbers for your own file.
Have a question we didn't answer?
Ask us on the call. Call 877-FUND-654 with any question. We call you back, usually the same business day, and we always talk with you before we shop your file.