Key Takeaways:
- You can qualify for a home loan using your liquid assets, like savings, stocks, and retirement accounts, instead of traditional pay stubs or tax returns.
- These loans are designed for retirees and self-employed people who have significant wealth but show low taxable income on their filings.
- While you won’t need to prove monthly earnings, you should expect a higher interest rate and a larger down payment than a conventional mortgage.
Every week, a business owner or a retiree walks into a big bank with millions in liquid assets but gets turned away because their tax returns show very little “taxable income.”
If you are self-employed, you likely use legal deductions and depreciation to lower your tax bill. While that is a smart move for your bottom line, it is often a deal-breaker for conventional lenders who only look at the final number on your filings.
An asset-based mortgage offers a way out of this loop. Instead of focusing on what you earn every month through a paycheck, we look at what you own. This is a no-doc loan alternative where your liquidity, your stocks, bonds, and savings, act as the primary qualifier for your loan.
As a specialist broker, we help high-net-worth individuals navigate these non-QM paths to find solutions that traditional banks cannot offer.
Quick Links:
- What Is An Asset-Based Loan?
- How Asset Utilization Loans Work Step By Step
- Qualifying For Personal Asset Loans
- Asset-Based Mortgage Rates And Interest
- Asset-Based Lending Vs. DSCR And Hard Money
- Pros And Cons Of Asset Utilization Loans
- Should I Get an Asset-Based Mortgage?
- Applying for an Asset-Based Home Loan
- Secure Your Asset-Based Home Loan With ID Mortgage
- FAQs
What Is An Asset-Based Loan?
If you are wondering what an asset-based loan in plain terms is, think of it as a bridge between your wealth and your home. In a standard mortgage, a lender reviews your pay stub to determine whether you can afford a monthly payment.
With personal asset-based lending, the lender treats your liquid assets as a steady stream of monthly income.
This product is often called an asset depletion mortgage. We use this method for individuals who want to buy a primary residence or a vacation home but do not fit the narrow boxes of a standard bank.
It is a personal, no-income documentation mortgage designed for people whose financial strength lies in their portfolio rather than a paycheck. We recently worked with a client who had retired early from a tech firm.
Their income was technically zero, but their brokerage account was in the seven figures. An asset loan mortgage was the only tool that made sense for their situation.
Pro Tip:
- If you have a part-time consulting gig or a small pension, you can usually add that income to your asset depletion calculation. Mixing these sources helps you qualify for a higher loan amount without needing more assets.
How Asset Utilization Loans Work Step By Step
The process of securing an asset utilization loan is more about math than it is about employment history. Here is how we typically break it down for our clients:
- Inventory your assets: We look at everything liquid. This includes checking and savings accounts, CDs, stocks, bonds, and mutual funds. Retirement accounts like 401(k)s and IRAs also count, though they are treated slightly differently.
- Understand the “Haircut”: Lenders rarely value volatile assets at 100 percent. While cash is valued at its full amount, stocks or 401(k)s might be valued at 70% or 80% of their value. This protects the lender against a sudden market drop.
- The math: The lender uses a formula to see how asset depletion works for your specific file. For example, if you have $1.2 million in qualifying assets after the haircut and the lender uses a 60-month divisor, they will “create” $20,000 in monthly asset-based income for you.
- Final DTI calculation: We take that $20,000 of asset-based income and compare it to your new mortgage payment and other debts to reach your debt-to-income (DTI) ratio.
This calculation allows the lender to verify that the borrower has enough liquid wealth to cover the loan for a set period, even without a job.
We can often combine this with other income sources, such as a small pension or part-time consulting fees, to make the numbers work for asset-depletion loans.
Pro Tip:
- Lenders prefer to see that your money has been in your accounts for at least 60 to 90 days. Avoid moving large sums of money between different banks right before you apply, as this can create a “paper trail” headache that slows down your approval.
Qualifying For Personal Asset Loans
This path is not for everyone, but for the right person, it is a game-changer. Asset-based lending for individuals is the gold standard for a few specific groups.
Retirees are the primary candidates. We frequently see a mortgage for retirees with assets where the client has a massive nest egg but a very small Social Security check.
This allows them to buy their dream home in places like Ann Arbor or the California coast without needing to liquidate their entire portfolio and pay massive capital gains taxes.
Self-employed mortgage assets are also a significant factor here. Business owners in high-cost areas like Los Angeles often have high net worths but low taxable income due to business reinvestment.
Personal asset loans allow them to buy real estate by showing their bank balance instead of their P&L statement. This is also a fantastic option for home loans for non-US residents who may have significant wealth abroad but no domestic credit history.
Pro Tip:
- Lenders often apply a smaller “haircut” to 401(k) or IRA accounts if you are over the age of 59 and a half. If you have reached retirement age, your retirement funds might count for 80 percent or more of their value rather than the standard 60 percent or 70 percent.
Asset-Based Mortgage Rates And Interest
We believe in being upfront: asset-based mortgage rates are generally higher than what you see on the evening news for a 30-year conventional fixed loan. Because the lender is conducting a manual, “off-book” review of your assets, they assume more perceived risk.
Asset-based lending interest rates should be roughly 0.5 percent to 1.5 percent higher than traditional rates. Your specific asset-based loan rates will depend on your down payment and your credit score. If you put 30 percent or 40 percent down, you can often secure much better asset depletion mortgage rates than if you aim for the minimum down payment.
Think of the extra interest as the cost of bypassing the headache of two years of tax returns and a mountain of business paperwork. We can often find California jumbo loan options that use these asset-utilization rules for loans well over $1 million.
Pro Tip:
- While some programs allow for less, putting 30 percent down often unlocks much better interest rates. For many asset-based lenders, this threshold significantly lowers their risk and results in a more affordable monthly payment for you.
Asset-Based Lending Vs. DSCR And Hard Money
It is easy to confuse these specialized products, but they serve very different goals.
- Asset-Based vs. DSCR: An asset-based loan uses your personal wealth: what you have in the bank. A DSCR loan for real estate investors focuses only on the property’s rent. If you are buying a home to live in, you need an asset-based loan. If you are purchasing a rental property, DSCR is the better option.
- Asset-Based vs. Hard Money: Hard money loans are fast, expensive, and short-term. They are for “flipping” or bridge scenarios. Asset-based lending for real estate is a long-term, 30-year mortgage.
The National Association of Realtors (NAR) has noted a steady increase in the use of non-traditional loans among high-net-worth buyers as traditional banking becomes more rigid.
Whether you are looking for asset-based lending for rental property or a home for your family, we can help you distinguish between these real estate-backed loans.
Pros And Cons Of Asset Utilization Loans
Before you commit, you should look at the trade-offs.
The Pros:
- You can skip the intrusive deep dive into your tax returns.
- Higher loan limits are often available compared to conventional programs.
- It is a perfect tool for building a real estate portfolio without needing a W-2.
The Cons:
- You will likely need a higher down payment: often 20 percent or more.
- Your asset-backed mortgage will have a higher interest rate than a standard loan.
- Lenders require your assets to stay “at rest” during the process. You cannot move $500,000 from one account to another the day before we pull your statements.
Even with the higher rates, an asset mortgage loan is often the most efficient way to secure a property without disrupting your long-term investment strategy.
Should I Get an Asset-Based Mortgage?
This decision usually comes down to a few simple “If… then…” scenarios.
If you have $500,000 or more in liquid assets but your income is hard to prove on paper, then an asset-based lending mortgage is likely your best path. If you are a self-employed professional with massive tax write-offs, this is your solution.
However, if you qualify for a conventional loan based on your income, we always suggest that first because it will save you money on interest.
If you have a steady job but do not want to provide tax returns, VOE (Verification of Employment) loans are another alternative we can explore. Our goal is to find the path of least resistance for your specific financial profile.
Applying for an Asset-Based Home Loan
Ready to move forward? The preparation for asset-based mortgage lenders differs from that for a standard application. Instead of paystubs, we need a clear picture of your liquidity.
Start by gathering two months of complete statements for all your liquid accounts. Make sure you include all pages, even the blank ones. You will also need to verify the documents required to buy a house, such as your ID and proof of homeowner’s insurance.
Once you have your statements ready, we can run a quick analysis to show you exactly how much income your assets will generate in a lender’s eyes.
Pro Tip:
- When gathering your documents, always download the full PDF statements directly from your bank’s portal. Lenders cannot accept screenshots, Excel exports, or photos of your screen, so having the official files ready can save you a week of back-and-forth.
Secure Your Asset-Based Home Loan With ID Mortgage
Traditional banks often fail high-net-worth clients because their systems are built for the average employee. We do things differently. At ID Mortgage, we provide boutique, bilingual service that treats your wealth with the respect it deserves.
We do not just look at your tax returns: we look at your entire financial success.
If you are ready to stop fighting with big-box banks, give us a call. We will provide a free asset-utilization analysis so you can see exactly what you qualify for before you start shopping.
FAQs
Can I get a mortgage with no income but assets?
Yes. That is the fundamental purpose of an asset depletion loan. We use your liquid wealth to calculate a qualifying monthly income.
What is the minimum asset amount for an asset-based loan?
It varies by lender, but generally, you need enough qualifying assets to cover the loan amount and reserves for 60 to 84 months.
Is an asset utilization loan the same as a hard money loan?
No. A hard money loan is a short-term, high-interest tool. An asset utilization loan is a long-term, 30-year mortgage with much lower rates.
Do I have to liquidate my assets to get the loan?
No. You only need to verify that you have the assets. You can keep your money invested where it is, provided the lender can verify the statements.
Are asset-based mortgage rates fixed or variable?
We offer both options. You can choose a standard 30-year fixed-rate mortgage or a variable-rate loan like a SOFR ARM, depending on how long you plan to keep the home.
