Bank said no on a rental because I did the work myself, broker placed it in nine days
Bought a two bedroom cottage for $132,000 last spring, put about $28,000 of my own labor and materials into it, rented it at $1,450. Went to my bank for a refinance and got turned down, and the reason had nothing to do with the numbers. I had done the work myself with no permits pulled on the interior work, and their underwriter would not touch it. Fair enough, that's their rule.
A broker I'd met at a local meetup asked me two questions. Was the work structural, and was the property currently occupied by a paying tenant with a signed lease. It wasn't structural and it was. He put it with a DSCR lender who underwrote off the rent and the appraisal instead of off my income or my permit history.
Numbers: appraised at $189,000, 75 percent loan to value, so $141,750. Rate came in 1.5 higher than my bank's quote would have been, which stung. Origination was 1.5 points, $2,126, plus a $995 lender fee and $650 appraisal. Broker was paid by the lender. Nine days from application to clear to close, which I did not expect. Three year prepayment penalty stepping down 3, 2, 1, and I read that clause four times before signing because I don't intend to refinance inside three years but intentions change.
The part that nearly broke it was the lease. My tenant was month to month on a handshake because we'd known each other for years. The lender wanted a signed twelve month lease and a copy of the deposit. Took me a day to get it done and it could easily have gone sideways if he'd said no.
What I'd keep: asking a broker about product fit before assuming a decline means the deal is dead. The bank wasn't wrong, they just only sell one thing.