Asset-Depletion Mortgage Loans
Ideal Borrowers of Asset-Depletion Mortgage Loans
- Asset-Depletion mortgage loans are based on verifiable assets of the borrower
- Loan amounts up to $3 million: Over $3 million can be done in a case-by-case scenario
- Generally, a 620 credit score is preferred
- Traditional income or income tax returns are not requirements since the ability to repay the mortgage loan is based on the borrower’s liquid assets
- 4506T is not required
- Interest only, adjustable rate mortgage, and fixed rate mortgage available
- 20% down payment and/or 80% loan-to-value
- Available on purchase, rate and term refinance, and cash-out refinance.
All asset-depletion mortgage loans are underwritten on a case-by-case basis scenario. Exceptions to the guidelines can be made since these are non-QM mortgage loans.
In general, with asset depletion mortgage loans where borrowers will be borrowing against using their liquid assets, they can normally use 70% of what they have in retirement assets and 100% in liquid assets such as money in bank accounts.
How Non-QM Mortgage Lenders Calculate Asset-Based Mortgage Loans
Mortgage underwriters of asset-based mortgage loans will first determine the total amount of liquid assets that will be used. The next step is to divide the total liquid assets that will be used by the number of years of the asset-based mortgage loan program. It is generally 5 years, 7 years, or 10 years. The number of years is a factor determined by the mortgage lender. Let’s take a case scenario where your monthly payment will be $10,000 per month on an asset-based mortgage loan. If you have $600,000 in liquid assets and the lender factors it by 5 years, you divide $600,000 by 60 months, you will get $10,000 per month which will make you eligible to qualify for the asset-based loan program.