Introduction

Have you ever wondered how high-net-worth individuals, with vast assets but inconsistent income, secure mortgage loans? Enter the world of Asset Depletion Mortgage Loans. But how can you get approved these loans? Let’s dive in.

What is an Asset Depletion Mortgage?

Definition

An Asset Depletion Mortgage, is a kind of loan that allows borrowers to qualify based on their liquid assets rather than traditional income. It’s the financial world’s way of saying, “We see your ability to repay the loan, even if it isn’t in the form of a monthly paycheck.”

How It Works

Imagine you have a large sum of money in stocks, bonds, or other liquid assets. Rather than looking at your monthly income, lenders look at these assets, and approve the loan based on your liquidity.

Benefits of Asset Depletion Mortgages

Flexibility for Borrowers

For those with significant assets but no variable income, this is a game-changer. Why? Because it offers a more holistic view of one’s financial position. Think of it as the lender seeing the forest and not just the trees.

Appealing to High-net-worth Individuals

If you have complicated tax returns, or unique income circumstances, an asset depletion loan is the perfect way to simplify your mortgage application.

With an asset depletion loan, you do not provide proof of income or employment history because your ability to repay the loan is based on your available assets, not employment.

Comparing Traditional Mortgages and Asset Depletion Mortgages

Traditional mortgages are straightforward but can be limiting for certain individuals with unique income circumstances. On the other hand, asset depletion mortgage loans offer flexibility but might come with slightly higher interest rates. Terms vary based on credit score and loan to value ratio.

Qualifications for Asset Depletion Mortgages

Documentation Needed

Be prepared to provide full statements of all your assets that you would like to have considered in your asset calculation.

Asset Criteria – 2 Ways to Get Approved

Not all assets are created equal. Lenders have different requirements on how they consider each type of asset that you have on this non-QM type of loan.

Here are two of the best asset depletion loan options available on the market today.

Assets as Income Loan:

Qualified assets will be divided by 60 months.

Example: if you have 300K in qualified assets, your income is $5,000/month.

Here is how the qualified assets are considered:

Bank – Checking, savings, and money markets – 100%

Publicly traded stocks and bonds – 90%

Mutual funds – 90%

Retirement accounts (401k, IRA, SEP, etc.) – 80%

• 3 months asset statements will be required
• at least 20% down payment on home purchase
• Minimum 600 credit score

Asset Coverage Loan:

Qualified assets will be reviewed to confirm assets exceed the principal balance of all debt as well as 12 months reserves for all mortgage obligations.

Example: if your total outstanding debt is 300K, and you have qualified assets of 400K, you should qualify depending on how much your monthly mortgage obligations are.

• 2 months asset statements
• at least 15% down payment
• Minimum 600 credit score

Conclusion

Asset Depletion Mortgage Loans are an innovative solution catering to individuals with vast assets but less consistent income. They level the playing field, offering an alternative to traditional mortgage paths. So, next time you’re thinking about mortgages, remember: there’s more than one way to qualify.

FAQs

1. What assets are typically considered for asset depletion mortgages?
   • Liquid assets like checking, savings, stocks, bonds, mutual funds, and retirement accounts are considered.
2. Are interest rates higher for asset depletion mortgages compared to traditional mortgages?
   • They can be slightly higher due to the perceived risk, but it varies by lender.
3. Can I use asset depletion mortgages for any property type?
   • Yes, this is for residential property. But some lenders might have restrictions on property types.
4. Is credit score still important for asset depletion mortgage loans?
   • Yes, while assets are crucial, credit score is another important piece of the mortgage approval.

I invite you to reach out.

Get your questions answered.

We have been very successful with getting borrowers approved even when other lenders said it wasn’t possible.

If for some reason we can’t help, we’ll do our very best to point you in the right direction.