Asset Based Mortgage – Asset Depletion Loans
If you have a lot of assets, but make little-to-no income, an asset depletion loan may be for you.
Asset depletion loans are also known as “asset based mortgages” or “asset dissipation loans”. Some people even refer to them as “no income, high asset loans”. All of these terms mean the same thing.
How Asset Depletion Loans Work
How as asset depletion loan works is you take your total assets and divide that total by 360 months (the number of months in a 30 year mortgage). When calculating the total amount of your assets, you can use 100% of what is in liquid (such as bank accounts), and 70% of the total amount that is in retirement and investment accounts.
Below are some examples:
One example would be if you were to have $250,000 in liquid assets (such as bank accounts), and $200,000 in retirement funds, and another $100,000 in investments (such as stocks). This is how you would calculate the total amount of your assets that you can use to qualify for the program with.
$250,000 x 100% = $250,000
$200,000 x 70% = $140,000
$100,000 x 70% = $70,000
Total eligible amount = $460,000.
The total qualifying amount of assets that you can use is $460,000. You would then take this amount and divide it by 360 months. The total monthly payment you would likely qualify for is $1,278.
Another example is if someone had $500,000 in liquid/cash, and another $300,000 in an IRA, $100,000 in a pension?, and $75,000 in stocks.
$500,000 x 100% = $500,000
$300,000 x 70% = $210,000
$100,000 x 70% = $70,000
$75,000 x 70% = $52,500
Total eligible amount = $832,500
The total qualifying income of assets that you can use is $832,500. This amount divided by 360 months equals $2,311, which is what would be the maximum amount of a monthly payment you could qualify for.
Would you like some help seeing if you qualify for an asset based mortgage? We can help match you with the best asset based mortgage lender for your location. We work with most of the best lenders and banks that offer these programs. You can also view a sampling below of a few of the best mortgage lenders offering these loans.
Asset Based Mortgage Lenders
A few of the larger lenders that offer asset based mortgages are featured below. These are not necessarily the most competitive, however. We encourage you to contact us for assistance if determining the best lender for your unique situation. If you wish to apply with a lender directly, be sure and first look to make sure the lend in your state.
We would rate these as some of best asset based mortgage lenders that lend in many states. A lot of lenders who offer these programs only lend in a small number of states. However, our experience is that these lender often offer the best loan terms. We advise you to compare all of your options to see who will provide you with the best loan. If you would like some assistance in finding the best lender for your asset based mortgage, get in touch with us. We would love to help.
Frequently Asked Questions
What type of assets may be used to qualify?
You may use any of the following assets: bank accounts (checking or savings), money market accounts, a CD (certificate of deposit), investment accounts (such as stocks, bonds, and mutual funds), and retirement accounts (such as a 401k or IRA).
Are assets based mortgages the same as a reverse mortgage?
No, a reverse mortgage is different than an asset based mortgage. A reverse mortgage….
Is it ok if I am not employed and/or retired?
Yes, there is no requirement that you be currently employed. In terms of showing your ability to repay the mortgage, you can qualify exclusively using your assets.
Must I be a certain age to be eligible, or are there any certain age restrictions?
No, there are not any age requirements to be eligible. There are two potential ways that your loan application may be dealt with differently though, based on your age. The first is if you are over the age of 75, you should be able to use a formula based on 120 months instead of 360 months (to calculate the max monthly payment you would be eligible for you would take your total eligible assets x 120 months). The second potential scenario is if you are younger (under age 50), a lender may not let you use your retirement accounts as eligible assets. This would be since you are too far from retirement age. It will be up to the underwriter and the guidelines of the lender you apply with.
Are these mortgages available for investment properties?
Most lenders only offer these loans for an owner occupied property (primary residence). Some will consider an investment property, but you must have good credit and a lot of assets.
What if my assets / accounts are jointly owned?
If you have joint ownership of bank accounts or other assets, some lenders will not have any issue with this. There is a chance that an underwriter may reduce the amount of the assets that are eligible. It will be left to the underwriter to decide. We work with many lenders that offer these programs, and would be glad to help you find one that does not have an issue with jointly owned assets.