Asset Only Loans

What is an Asset Only Home Loan?

If you're a homebuyer who cannot meet Conventional Loan guidelines but have substantial assets that can be liquidated, then an Asset Only Home Loan may be the ideal product for you. Unlike a traditional mortgage, and Asset Only Home Loan or "Asset Utilization" allows borrowers to qualify based on their liquid assets rather than monthly income. When applying for this mortgage, borrowers are not required to provide tax returns, paystubs or w2's. This type of mortgage is ideal for individuals who struggle to demonstrate consistent monthly income but possess substantial asset balances.

Here are some of the more commonly used assets:

• Checking or Savings accounts

• Certificates of Deposit (CD)

• Money market accounts

• Investment accounts, including stocks, bonds and mutual funds

• Retirement accounts such as 401k, 403b or IRA's

These assets must funds that can be liquidated (converted to cash or cash equivalents) within 30 days.  Qualified purchasers may be able to borrow up to 90%* of the property's value on a purchase and 80%* of the property's value as a cash out refinance. Although no monthly income is necessary for eligibility, the loan file must show evidence of the borrower's "ability to repay".

What are the benefits of an Asset Only Home Loan?

Asset only loans are gaining popularity, and for a good reason. These loans offer a unique opportunity to make an offer on a property without having to sell all your assets. The beauty of asset only or "asset utilization" loan programs is that they allow you to use your retirement income and other assets to qualify for a mortgage loan. This program is specifically designed for those who have significant and verifiable assets, making it a great option for both homebuyers and those looking to refinance. Your approved loan amount and monthly mortgage payments are determined by the amount of assets you have.
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One of the primary advantages of asset-based financing is that you can qualify even if you have limited or no verifiable monthly income. Many people with limited income have sizeable assets in various accounts. With this program, you can use your assets to qualify for a mortgage, even if your verifiable monthly income is small.
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If you have limited income, asset-based financing can provide a great solution by generating an income stream from your assets.

What are the minimum assets needed to qualify for a Asset Only Home Loan?

Assets must be verified with the most recent three (3) monthly account statements, quarterly statement or a verification of deposit (VOD) covering at least 90 days. Assets must be seasoned atleast 120-days. When asset are the primary source of income, the following minimum assets are required:

• The lesser of 1.5 times the loan amount or $1,000,000 after down payment, loan costs and required reserves.

• When assets are used to supplement other primary income sources the minimum asset requirement above is waived.

What assets are eligible to be used for an Asset Only Home Loan?

Assets must be liquid and available excluding any early term penalties. For the purpose of calculation, your available assets must be reduced by the amount of any early withdrawal penalty. Additional documentation may be requested to validate the origin of the funds if a recent large deposit was made. It's crucial to understand that assets in a revocable trust, where the borrower serves as the trustee, are permitted. Additionally, assets in an irrevocable trust are allowed if the borrower is the beneficiary and has immediate access to those assets.

• 100% of Checking, Savings, Money Market Accounts and U.S. Treasuries with maturity less than 1 year.

• 100% of cash surrender value of life insurance less any loans.

• 70% of Stocks, Bonds, and Mutual Funds.

• 70% of Retirement Assets: Eligible if the borrower is of retirement age. (at least 59 ½)

• 60% of Retirement Assets: Eligible if the borrower is not of retirement age. (60% takes into account a 10% early withdrawal penalty)

What assets are ineligible to be used for an Asset Only Home Loan?

• Equity in Real Estate.

• Privately traded or restricted/non-vested stocks.

• Any assets held in the name of a business.

• Any asset which produces income already included in the income calculation.

• Assets held in an irrevocable trust where the beneficiary of the trust is not the borrower.

• Assets held in a charitable giving trust, donor advised fund, or similar entitywhere the intended beneficiary is not the borrower.

Are there any restrictions to an Asset Only Home Loan?

The main drawback of an Asset Only Mortgage is that you will need to have a good credit history and substantial assets to be able to afford the monthly repayments. Typically, the rate on these mortgages is slightly higher as well. It is also important to remember that the value of your assets may go down over time if you’re using those assets to satisfy monthly payments. Additional program restrictions are listed below:

• Non-occupant co-borrowers not allowed.

• All individuals listed on the asset account(s) must be on the Note andMortgage
• Gift funds are not eligible.
• Crypto Currency is not an eligible liquid asset for asset utilization/depletion.
• First-time Homebuyers and loans with loan-to-value under 85% require 6-months liquid reserves to cover the new loans Principal, Interest, Taxes, Insurance, and Association dues (PITIA). If the loan-to-value is over 85% the required reserves increases to 12-months PITIA.  For loan amounts over $1.5 million borrwores will need 9-months PITIA and loan that exceed $2.5 million will require 12-months of PITIA.

Make sure you speak to a qualified mortgage advisor such as Onshore Mortgage to find out if this type of loan is right for you.

*Credit and income restrictions do apply. Please visit our Disclosures page for a detailed breakdown of all loan types.