Carefree is small, deliberately. A town of a few thousand north of Scottsdale, next to Cave Creek, organized around a village core with the Desert Gardens and the sundial, surrounded by custom homes set into boulder outcroppings on large lots.
That character is why people buy there and it is also why the loan is different. Low volume, high variability, and almost no two comparable houses. For a self-employed buyer, you now have two hard problems in one transaction: a rebuilt income figure and an appraisal with a thin comparable set.
The appraisal problem, which here is the main event
In a production subdivision an appraiser has ten recent sales of nearly identical houses within half a mile. In Carefree they may have three sales in a year, of homes built in different decades, on lots of different sizes, with different views and wildly different levels of finish.
What that means practically:
The comparable set stretches. Geographically, in time, and in property type. Each stretch requires an adjustment, and more adjustments mean more room for the value to land somewhere you did not expect.
Boulder and view lots are hard to adjust for. A dramatic boulder setting or an unobstructed mountain view is worth real money to a buyer and is genuinely difficult to quantify from sales data. Appraisers handle it, but the margin for a value that comes in under contract price is wider here than almost anywhere in the Valley.
Custom finish levels vary enormously. Two houses of the same square footage in the same decade can differ by a large multiple in quality of construction and finish. The data to support that distinction may not exist in recent sales.
The practical steps: order the appraisal early, make sure your lender orders from an appraiser with genuine experience in this market rather than one who works mostly in the production subdivisions down the hill, and decide in advance what you do with a short value before you are facing a deadline. See Appraisal Gaps on an Arizona Contract.
The property items that come with this terrain
Well and septic are common. Expect well documentation, potability and in some cases flow testing, plus scrutiny of any shared well agreement. Septic means the Arizona transfer of ownership inspection, which takes time and occasionally finds something expensive. Both items belong on the calendar at contract, not in week three. See Wells and Mortgage Financing in Arizona and The Septic Transfer Inspection.
Acreage limits. Some programs cap the share of total value attributable to land rather than improvements. On a large view parcel where the dirt carries much of the price, that can constrain the loan amount in a way that surprises people.
Access and easements. Some parcels are reached by private roads or shared drives. A lender wants legal, recorded access. Unrecorded or ambiguous access is a real title and underwriting item.
Insurance. Distance to a fire station and the wildland interface both affect availability and cost. Price it early rather than assuming.
Association obligations vary. Some addresses have none. Some sit in gated communities with substantial dues. Confirm for the address.
How your income gets rebuilt
Two years of filed returns, analyzed on Fannie Mae Form 1084 or Freddie Mac Form 91. Not revenue, not your profit and loss.
- Schedule C: net profit from line 31, plus depreciation, depletion and business use of home added back, minus non-recurring income, divided by 24.
- 1120S and K-1: W-2 wage from the entity counts. K-1 ordinary income counts where distributions are documented and the entity has liquidity to keep paying them.
- 1065 and K-1: same, with guaranteed payments included.
- Schedule E: rental net with depreciation, taxes, insurance, interest and dues added back where allowed, minus full PITIA.
Every dollar of aggressive deduction saves tax at your marginal rate and costs roughly four to five dollars of buying power. A year two lower than year one generally becomes your qualifying income rather than the average.
Carefree prices put most of these purchases in jumbo territory, which tightens everything: reserves held in verifiable assets after closing, tighter ratio tolerances, and fuller documentation. For a self-employed buyer the reserve test is the sharp edge, because money sitting in a business operating account is not automatically counted as yours and moving it out has tax consequences your CPA should see first. See Self-Employed Jumbo Loans.
When the returns do not support it
Bank statement. Twelve or twenty four months of deposits with an expense factor by business type, transfers stripped out. See How Bank Statement Income Is Calculated.
Asset depletion. Qualifying income derived from verified liquid assets. See Asset Depletion Loans.
No-ratio. No debt-to-income test at all. Credit, assets, reserves and the property carry it.
The specific caution for this area: not every non-QM investor will lend on a parcel with a private well, a shared well agreement, substantial acreage or private road access. An unusual income structure plus an unusual property narrows the field quickly. Put both on the table on the first call.
Before you write in Carefree
- Ask about the water source and get any shared well agreement in hand.
- Put the septic transfer inspection on the calendar at contract.
- Confirm legal recorded access to the parcel.
- Price insurance early.
- Order the appraisal immediately and from someone who works this market.
- Decide your plan for a short value before you need one.
- Count reserves after closing, at the applicable discount, excluding undocumented business funds.
- Get your CPA and your lender in one conversation before the qualifying returns are filed.
Why bring this file to us
- We read the documents ourselves, rather than handing them to a processor and waiting.
- Broker model. An unusual file needs multiple investors, not one bank's shelf.
- The full toolkit, agency and jumbo through bank statement, asset depletion, DSCR and no-ratio non-QM.
- You talk to the principal. Ricky Khamis is President of EPiQ Lending, NMLS #173141, lending in Arizona since 1999 and a 2025 Presidents Club Winner at CMG Home Loans. Direct line: (480) 999-9842.
EPiQ Lending is NMLS #1936984, at 7975 N. Hayden Road, Suite A-101 in Scottsdale. Verify all of it before you trust any of it: Ricky's EPiQ Lending profile, the Scottsdale branch, and the license itself at NMLS Consumer Access. Hold every lender to that standard, including us.
Send me the file before you write an offer, and I will tell you what it actually supports.
Equal Housing Opportunity. This is general information, not a commitment to lend or an offer to extend credit. Program guidelines, eligibility requirements and documentation standards vary by investor and change over time. Rates, terms and program guidelines change and depend on credit approval, property appraisal and other qualifying factors. Not all applicants will qualify. Non-QM financing carries different pricing and terms than agency financing. Consult your tax advisor regarding your own situation.
Looking at a specific home? Send me the address and I will run the numbers: rickykhamis.com/analyze
