​​Asset Based Mortgage – Everything You Must Know

​Do you live off your investments or report such little taxable income on your tax returns that most lenders turn you down for a mortgage? 

It’s frustrating, we know. You know you have more than enough money to qualify for and afford a mortgage, yet no one will give you a chance.

At Fidelity Funding Mortgage Corp, we cater to borrowers just like you with our asset based mortgage program. You use your liquid assets rather than income to qualify for a mortgage. It’s not your traditional mortgage, but it gets you the funds you need to buy a house without depleting your assets all at once and it’s a reputable program that borrowers appreciate.​​

What is an Asset Based Mortgage?

When you live off your assets, you deplete your assets. It’s not a bad thing even though ‘deplete’ sounds bad. In other words, you live off your assets, using them as your annual income rather than receiving payment from an employer. It’s using your liquid assets, the money you’ve worked hard to earn (by working and investing), and enjoying life!

An asset based mortgage creates an ‘income stream’ from your assets by depleting them over the term of the mortgage. It’s how we qualify you for a mortgage despite not having traditional income.​​

How Does it Work?

The asset based mortgage amortizes your assets after the down payment, closing costs, and required reserves. In other words, it spreads out your assets over the mortgage term to determine your eligibility for a loan.

At Fidelity Funding Mortgage , we have four asset based mortgage programs we can use to help any type of borrower in Florida who doesn’t have traditional income.

At Fidelity Funding Mortgage, we have four asset based mortgage programs we can use to help any type of borrower in Florida who doesn’t have traditional income.

Conventional Loan with Asset Depletion

Most people already understand conventional loans – it’s the loan most people think about when qualifying for a mortgage. What most people don’t know is you can actually qualify for a Conventional loan using asset depletion if the conditions are right.  There are TWO distinct types of Conventional loans: 

With the ​​"FANNIE MAE" Conventional loan model, you can borrow up to $726,200 currently, if you can prove you have enough funds to qualify. The conventional loan amortizes your retirement assets over 360 months and must be from a qualifying retirement account.

• For example, if you have $1 million in net assets (after the down payment, closing costs, and reserves), you’d have $2,777 monthly qualifying income.

With the ​​"FREDDIE MAC" Conventional loan model, you can also borrow up to $726,200 as long as you can prove you have enough funds to qualify. This loan amortizes your assets over 240 months; however the biggest differences here are that A) the borrower must be at least 62 years of age and B) there are restrictions on the amount of the total liquid assets that can be used for income calculation purposes.

• For example, if you have $1 million in net retirement assets (after the down payment, closing costs, and reserves) and you are 62 years old or older, then you’d have $4,166 monthly qualifying income.​​

Our Private Client Portfolio Loan with Asset Depletion

We also work with luxury home buyers and offer an asset based mortgage for homes up to $20 million, which uses a proprietary income calculation model. Using our example above, you’d have $5,729 monthly qualifying income.​ (200% more income than a conventional loan for the same asset)​  This program offers our lowest interest rates, highest loan sizes, and uses our proprietary income calculation model, offering less restrictions and significantly more qualifying income than a Conventional loan. Learn more about our Private Client Portfolio Loan Program HERE ˒˒˒˒​​

Flex Home Loans with Asset Depletion

Our Flex Home Loans program gives low credit borrowers a second chance. This program offers more flexible guidelines, allowing loan amounts up to $2.5 million and amortizing your income over just 84 months. Using our $1 million in net assets example, you’d have $11,904 in monthly qualifying income, making it much easier to qualify for a home loan.​​

Flex Home Loan with Asset Matching

Our final program works a bit differently, helping even more borrowers in the Tampa Bay area get mortgage financing. It’s called the asset matching loan. With this loan rather than depleting your assets, we match your assets. If you have $500,000 in assets, you can borrow up to $500,000. There are no calculations to determine or loan amounts to figure out – it’s straight-forward.

​​Who Qualifies?

To use your liquid assets to qualify for a mortgage, you’ll need assets, obviously. But you’ll need enough assets to deplete over the term required by the mortgage program. If you meet that requirement, you’ll also need to meet the following:

• ​​Conventional loans require a 3% down payment for first-time homebuyers and 5% for subsequent home buyers. You’ll need ‘good’ credit’ which can vary, but most borrowers need a 660 credit score or higher.
  

• The Private Client Portfolio loan requires a larger down payment of 20% - 25%, but we finance up to $20 million for well-qualified applicants. There is no credit score requirement for this program, but your credit will be reviewed on an individual basis—and of course you’ll need the assets required to qualify for the loan amount you need.  Learn more about our Private Client Portfolio Loan Program HERE ˒˒˒˒​​

  Flex Home Loans with Asset Depletion

• ​​The Asset Depletion Flex Program requires at least a 10% down payment and a minimum 660 credit score.
• The Asset Matching Flex Program requires a much larger down payment of 30% but allows credit scores as low as 600.​​

Why Choose Asset Based Mortgages? 

Asset based mortgages have pros and cons, just like any other mortgage. 

First, let’s look at the benefits:

• You can get a mortgage without standard income·  You can use asset based mortgage loans on second homes
• The qualifying requirements are relaxed compared to standard income programs
• You can keep your assets, allowing them to grow, while leveraging an investment in a home

​​As with any ​mortgage ​investment, there are risks including:·  If you don’t make your payments, you could lose your home·  If your assets deplete faster than you anticipated, it could leave you in a difficult financial situation.

Get the Asset Based Mortgage you Deserve

If you have significant assets set aside, you may be a good candidate for an asset based mortgage, using your liquid assets to qualify for a mortgage.

Rather than investing all your money in a home upfront and putting it at risk, we can help you get the mortgage necessary to use your liquid assets in a timely manner, giving them plenty of opportunity to keep compounding, growing your earnings while you also invest in a home.

At Fidelity Funding Mortgage Corp, we are happy to help you choose the mortgage that’s right for you. Not too many people know about the use of liquid assets to get a mortgage, but once the word gets out, more Florida residents will be buying homes and achieving their financial dreams.

If you’d like even more information about asset based mortgage loans, click ​​HERE for our Asset Based Home Loan Resource Page.

WRAPPING UP...

If you’re living off of your liquid assets and are looking to purchase, refinance or get preapproved to purchase a home anywhere in the state of Florida, we’d love to help.  Simply give us a call so we run some numbers for you and answer all your questions! 

You can also drop us a line HERE »

Yours in successful homeownership,

Derek Bissen
Loan Originator
NMLS#365627
Unconventional Lending Program Director