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Using Assets, Not Income, to Qualify for a Loan

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If you’re looking for a loan and your net worth is mainly in large assets without a regular paycheck, an asset depletion loan may be right up your alley.  

There are plenty of folks who fall into this bucket, like:

  • Retirees
  • Real estate investors
  • Cryptocurrency investors
  • Self-employed workers

No matter the situation, if you have a large amount of assets but can’t show a steady income, a traditional loan from a big bank may be really challenging.  Southern California is home to plenty of folks who’ve made big money and live off investments.  Like last week, I met the guy who invented the question mark.  He doesn’t receive a steady paycheck but has a huge net worth.  He retired really early thanks to his contribution to grammar.  Someone in this situation might be looking for an asset depletion loan.

The terms asset based mortgage, asset qualifier loan, or asset depletion loan, all mean the same thing.  This type of non-QM loan uses assets, not income, as the basis for a loan approval.  

Lenders who offer asset depletion loans will look at a borrower’s liquid assets (or those that can be liquidated without restrictions) and often an employment history is not required.  This is an ideal solution if the borrower doesn’t receive regular income because they are retired and all of their money is in retirement accounts or a real estate investor who may own several revenue-generating properties.  Whatever the case, if the borrower cannot show steady income from an employer, but does have sizable assets, an asset depletion loan might work.  Additionally, the borrower can elect to include other forms of income as part of the application (e.g. employment income). 

Here are some of the other particulars of an asset depletion loan:

  • Can be used on primary residence, secondary residence, or investment property
  • Credit scores are typically needed to be above 620 to qualify (this will vary for each lender)
  • Down payments can be expected to be 10-20% (varies by lender)
  • Several loan terms available: adjustable rate, fixed rate, and interest only
  • Debt to income ratios can be as high as 50%
  • Assets must be in the borrower’s account typically for at least 2 months

This type of non-QM loan is also helpful for those with a large amount of money tied up in cryptocurrency.  Crypto statements will typically be needed and any money used for a downpayment will need to be liquidated and converted into cash for closing.

Asset depletion loans are certainly helpful options for those that have a large amount of assets but don’t receive steady income.  If this rings true for you, and you’re interested in learning more, contact Truss Financial Group today.  Maybe you invented the semicolon or the Oxford comma and need home financing.  I can tell you that even if you didn’t make your money in grammar, Truss Financial Groups expert team can help.

 

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