Asset Based Mortgage Aka Asset Depletion Loan Asset Depletion Loans are a type of home loan that allows borrowers to qualify based on their liquid assets rather than traditional income sources like a salary or self-employment income. This type of loan is particularly useful for retirees, high-net- worth individuals, or those with substantial savings but little to no regular income. How it Works: • Underwriting uses a formula to determine how much of a borrower's assets can be used as "income." • Typically, they divide the total eligible assets by a set number of months (Example: divide your liquid assets by 60 which equals your qualifying monthly income and loan amount. Please • Note: Not all assets value are counted the equally. The resulting figure is treated as monthly income for loan qualification purposes. Eligible Assets May Include: • Cash in savings or checking accounts • Investment accounts (stocks, bonds, mutual funds) • Retirement accounts (some lenders apply discounts to these) Certificates of Deposit (CDs) Highlights: • Max Loan Amount $5,000,000 • Min Loan Amount $200,000 • Minimum Credit Scores start at 660 • As little as 20% down payment for purchases available • No employment or income (Ability- to-Repay (ATR) is determined by assets. In some cases, if assets alone do not suffice, it may be combination with bank statements, W2 and other qualified income with underwriting approval • Cash-out and Interest-only options available • Property Types ( Primary, 2nd Homes & Investment Properties) • Non-Warrantable Condos, Co-ops and Condotels OK • Reserves vary (3 to 6 months) based on program • No rate adjustments apply to the program • Only one appraisal required regardless of loan amount or cash out • Debt to Income (DTI) Ratio not calculated (in most cases) Note: Mortgage Asset Loan income can be used in conjunction with all other income sources such as W2, self- employed, pension, Social Security or rental income What are the Benefits of an Asset Depletion Loan: An Asset Depletion Loan offers several benefits for borrowers who may not have a steady income but possess significant financial assets. Here are the key advantages: 1. No Traditional Income Requirements: Borrowers do not need to show a regular paycheck or W-2 income. Ideal for retirees, self- employed individuals, and high-net- worth individuals with substantial savings. 2. Leverages Liquid Assets for Loan Qualification: Underwriting considers assets such as cash, stocks, bonds, and retirement accounts instead of employment income. This provides flexibility for those with wealth tied up in investments. 3. Higher Loan Approval Chances: Applicants who might struggle to qualify under conventional income- based lending guidelines can still secure a mortgage. Particularly beneficial for entrepreneurs and freelancers with fluctuating incomes. 4. Can Be Used for Primary and Secondary Homes: These loans can be used for purchasing a primary residence, a vacation home, or even an investment property. 5. Potential for Lower Debt-to-Income Ratio (DTI): Because income isn’t calculated traditionally, borrowers with large assets may appear to have a lower DTI, improving loan approval odds. 6. No Need for Tax Returns or Extensive Employment Verification: This streamlines loan processing especially for those with complex tax situations. 7. Greater Flexibility in Loan Structuring: We offer various repayment terms and down payment options tailored to asset- rich borrowers. 8. Can Help Avoid Liquidating Investments: Instead of selling off assets (which could trigger capital gains taxes or disrupt financial strategies), borrowers can use their existing wealth as collateral. Who Benefits from an Asset Depletion Loan? • Retirees with significant savings but no steady paycheck. • Self-employed individuals who prefer to use their liquid assets rather than reported taxable income. • Investors or high-net-worth individuals with substantial non- wage wealth. Key Considerations: This type of loan typically requires a large amount of liquid assets to qualify. Also, interest rates may be slightly higher than conventional loans. Final Thoughts A property appraisal is a critical tool for ensuring fair and transparent property transactions. Whether you're buying, selling, refinancing, or settling legal matters, an accurate appraisal provides the objective property value needed for making informed financial decisions. Need help with your mortgage process? Call 1st Florida Lending at 407-300-2558 for expert guidance!