Asset Only Loans

What is an Asset Only Loan?

An Asset Only Loan is designed for high-net-worth homebuyers who may not meet Conventional Loan income guidelines but have strong liquid assets. Instead of qualifying with monthly income, you qualify using your assets. Because of this, you do not need to provide tax returns, pay stubs, or W-2s.This type of mortgage works well for buyers who have significant assets but cannot show steady monthly income.

Common eligible assets include:

• Checking or Savings accounts

• Certificates of Deposit (CD)

• Money market accounts

• Investment accounts, including stocks, bonds and mutual funds

• Retirement accounts like 401(k), 403(b), or IRAs

Your assets must be liquid or able to convert to cash within 30 days. Buyers may qualify for up to 90% of the purchase price or 80% on a cash-out refinance. While no income is required, you must still show the ability to repay the loan.

What are the benefits of an Asset Only Loan?

Asset-Only Loans offer unique advantages for buyers who have strong financial reserves but limited or irregular income. These programs allow you to qualify without selling your assets or relying on traditional income documents.
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Some key benefits include:

• You can qualify even with limited or no verifiable monthly income.

• You may use your retirement accounts, investment accounts, and other assets to qualify.

• Your loan amount and monthly payment are based on your total eligible assets.

• This program works well for both homebuyers and homeowners who want to refinance.

If you have significant assets but struggle to document income, asset-based financing can create an income stream for loan qualification.

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

The main drawback of an Asset Only Loan 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.