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Asset Based Loans


I am seeing and hearing more and more people talk about being able to qualify with the amount of assets they have. Sometimes qualifying for a Conventional loan is tough; maybe they are self-employed, slightly lower credit, or can't qualify for enough to get what they want in a house. There are programs for this!

The details are below on how this program works. This is a mortgage BROKER only program, so contact me if you want to go over it.

1. Need enough assets (see verified assets below for percentage allowed to use) to cover: A. Loan Amount B. 5 years revolving debt C. Closing Cost and Down Payment 2. The assets are not pledged or held "hostage" in a bank account - borrower has full access to the funds 3. Max LTV: 90% 4. Min FICO: 600 5. Loan Amounts to 3 million 6. NO income, NO employment, NO tax returns, NO DTI

Example #1: Loan amount: $300,000 Principal and Interest (P & I) for subject = $2,000 Verified Assets:

  • $200,000 Checking and Savings (100% usable) = $ 200,000

  • $300,000 Stocks and Bonds (90% usable) = $ 270,000

  • $400,000 401K (80% usable) = $ 320,000

  • $300,000 Mutual Funds (90% usable) = $ 270,000

Total allowable assets = $1,060,000

1,060,000 (allowable assets) minus $300,000 (loan amount) = $760,000 residual assets (IF Purchase, deduct Down Payment + Closing Costs as well) Total of monthly debt (revolving, installment, alimony/child support, hazard insurance, property tax on the subject property, Negative Cash Flow on all additional RE) excluding subject P&I = $2500 $2,500 X 60 months = $150,000. Required reserves per Option #1 (See Assets) = 3 months x $2,000 (P & I) = $6,000 Since the residual assets ($760,000) are more than the required funds to cover all other debt for 60 months ($150,000) plus required reserves ($6,000), the loan qualifies for the program. Please see Eligible Asset Types:

  • Bank Deposits – Checking, Saving, Money Market accounts = 100%

  • Publicly traded stocks and bonds = 90% (stock options not allowed)

  • Mutual Funds = 90%

  • 401(K) plans or IRA, SEP or KEOUGH accounts = 80% (These can only be used if distribution is not already set up)

Eligible Asset Types (Loan Qualification) Considered assets must be comprised of the following readily marketable assets which must be available to the borrower and are limited as follows: Ineligible Asset Types Business funds Non-liquid assets (automobiles, artwork, business net worth etc…)