Asset Depletion Mortgage Loans
Contrary to popular belief, not all potential homeowners follow the same path with regard to funding their home loan. Sometimes, their income can come from non-traditional sources, such as being self-employed or retired. In some cases, the majority of a person’s actual savings can be in the assets they own rather than in their job income. If lenders looked at job income alone, these people wouldn’t qualify for a home loan, but the value of their assets could be plenty to assure the lender that they are not a risk.
This is why an asset depletion mortgage, also known as an asset depletion loan, exists.
How Does an Asset Depletion Loan Work?
Rather than using your income from employment, you can use an asset depletion loan to quality for a mortgage provided you have substantial assets. In this case, your monthly income is calculated by dividing total liquid assets by 360 months (30 years, the length of most mortgages). Using funds from your assets means you don’t have to show income from any other source, including employment. So long as you have enough assets to pay for the loan and regular living expenses, you can qualify.
Do I Need to Cash In My Assets to Get Approved?
Not at all. The assets in this case are only used to demonstrate that you have the ability to make your mortgage payments. Think of it as an alternative to conventional home loan funding, but rather than look at your W2s or pay stubs, the lender looks at your liquid assets as your loan collateral.
What Types of Assets Can Help Me Qualify?
Only certain types of assets will help you qualify for an asset depletion loan. These generally include your checking or savings accounts, money market accounts, CD (certificate of deposit) accounts and so on. Certain types of retirement accounts can also qualify, like a 401(k) or an IRA. In addition, certain types of investment accounts like mutual funds, stocks and bonds may also qualify.
- Min FICO 680
- Loan amount up to 3M
- Max cash out $1.5M
- Income qualification based on verified liquid assets
- 15 & 30 year fixed; 5/1, 7/1, 10/1 ARMS
- Employment and Income are not required to be disclosed on the 1003
- Full asset documentation required for funds to close, reserves and qualifying asset requirements
- Assets can be cash in the bank, stocks, bonds, IRAs, 401ks, mutual funds or retirement accounts
- Asset levels in the verified accounts are expected to be consistent and sustained
How Do I Apply for an Asset Depletion Loan?
It’s important to note that these are just the basics as far as understanding how this type of alternative funding works and why it may be a good avenue for your unique borrowing needs. There are certain requirements and only a certain percentage of your assets are counted. For this reason, it’s important to choose a lender that has experience with an asset depletion mortgage to help you better understand these requirements, regulations and other steps you’ll need to follow in order to get qualified and approved.
Fortunately, LBC Mortgage has a great deal of experience in alternative funding for home loans, including asset depletion loans. Contact us today to learn more about this unique form of financing, and we’ll take the time to answer any questions you may have, as well as work with you to help you get the best possible rates should this be a loan that you’d be interested in pursuing.
Our helpful, friendly home loan experts are ready to serve and work hard to get you the best deal by taking the time to understand your unique situation.