Asset-based mortgages: qualifying on your assets.
Some home loans count what you own, not only what you earn. The lender reads documented assets, such as bank, investment and retirement accounts, and counts them toward qualifying, alone or together with your income. OriginPoint’s program in this area is OriginPoint Portfolio | Assets. This page explains the idea in general terms. It quotes no rates.
Sam Batayneh is a mortgage loan originator (NMLS 332474) and VP of Mortgage Lending at OriginPoint (NMLS 1598647). Sam has originated mortgages since 2004 and lends in all of California. Program names on this page are OriginPoint’s own.
What does it mean to qualify for a home loan on assets?
The lender counts documented assets toward your ability to repay, in place of income or on top of it. The assets are measured, not handed over.
A regular home loan asks one main question: does your monthly income cover the payment and your other debts? That question suits someone with a salary. It suits other people badly. A person can hold years of savings and investments and still show little income on a tax return, because the money is not being paid out as wages.
A loan that qualifies on assets asks a second question: what do you own, and could it support the loan? The lender reads statements for the accounts the program accepts and applies its own method to them. In the mortgage industry this is often called an asset-based loan, or asset depletion, because one common method treats a pool of assets as if it were drawn down over time. Those are general terms, not program names.
OriginPoint’s own program is called OriginPoint Portfolio | Assets. OriginPoint says that under it your assets can qualify you on their own, or add to your income, and it lists crypto, retirement, investment, checking, savings and money market accounts, and inheritance, as eligible. OriginPoint Portfolio | Assets on the Loan options page.
In general, qualifying on assets is not the same as pledging them. The home secures the mortgage, as on any home loan, and the statements are evidence. Ask Sam how OriginPoint’s program treats the accounts it counts.
Who commonly looks at qualifying on assets?
People with substantial documented assets whose income is small, uneven or hard to show on paper. These are common situations, not recommendations.
Between contracts, or after a career
Earnings can be large for a few years and then stop. Savings and investments built in those years may say more about a file than the current paycheck does.
Mortgages for pro athletesBetween projects
Income arrives by the project, with gaps, and royalties vary from year to year. Accounts built up over a career can steady a file that income alone leaves uneven.
Mortgages for entertainersBorrowers living on retirement accounts, investments and savings
Money comes from withdrawals, dividends and interest, not from wages. A loan that counts those accounts measures what is there.
After selling a business
The proceeds of a sale sit in accounts, and for a while there may be little income to show.
Mortgages for self-employed borrowersVested stock and savings
Shares that have vested and been kept are an asset. They are read differently from stock that is still vesting, which is a kind of income.
How stock income is countedAn inheritance
Money received once is an asset, not income. OriginPoint lists inheritance among the assets its program can count.
General education only, not advice about which loan to choose.
How do lenders count assets toward a home loan?
They read the statements, decide which accounts the program accepts, value each kind, and apply the program’s method. Each program has its own.
Which accounts count
Each program has a list. OriginPoint lists crypto, retirement, investment, checking, savings and money market accounts, and inheritance, as eligible for OriginPoint Portfolio | Assets.
How each is valued
Cash is generally counted in full. Accounts that can rise and fall, such as stocks, are often counted at less than the statement balance, and retirement accounts can be treated differently again. The program’s guidelines set this.
What is set aside
Money for the down payment, closing costs and required reserves is usually taken out first. What is left is what can be counted.
The method
One common method spreads the counted assets over a set period to give a monthly figure that is treated like income. Another compares the assets with the loan amount directly. Programs differ.
Assets with income
Where there is some income as well, a program may add the two together. OriginPoint says its program can count assets alone or with income.
The rest of the file
Credit history, the down payment and the appraisal are reviewed as on any other home loan.
What should you weigh before qualifying on assets?
The terms, how your accounts are valued, and what you plan to do with the assets afterward. Four things to go through with Sam.
The terms can differ
Each of these options has its own guidelines and terms, and is not right for everyone. If you could qualify either way, ask Sam to lay it beside a loan documented with income.
Accounts move
Stocks and crypto change in value. A lender counts what the statements show at the time of the review, and may ask for fresh statements before closing.
Some money is hard to reach
Retirement accounts can carry taxes or penalties on withdrawal, and some holdings cannot be sold freely. Those are questions for your own CPA or financial adviser.
The test is still repayment
The lender has to be satisfied that you can repay the loan. Counting assets is a way to show that, not a way around it.
What do lenders usually look at when a loan qualifies on assets?
Statements for every account to be counted, where the money came from, credit and the home. This is a general list, not OriginPoint’s requirements.
- Account statements. Recent statements for each account to be counted, every page.
- Ownership. Proof that the assets are yours to use. A jointly held account or a trust can call for more papers.
- Where the money came from. A large recent deposit, the sale of a business or an inheritance usually needs papers that show its source.
- Reserves. The savings left after the down payment and closing costs are paid.
- Credit. Your credit history and your monthly debts.
- The home. An appraisal, and how you will use the home: a main home, a second home or a rental.
How does qualifying on assets fit with jumbo loans and other programs?
It is a way to qualify. The loan amount is a separate question: a loan above the county limit is a jumbo loan, however the file is documented.
Program names are OriginPoint’s. Which one fits depends on your own file, and naming a program here is not a promise that a loan will be approved. OriginPoint publishes its own conditions and disclosures for each program, and those apply in full: ask Sam for them.
Plain answers about qualifying on assets.
What is an asset-based home loan?
Which assets can count toward qualifying?
Do you have to sell your investments to qualify?
Who commonly looks at qualifying on assets?
Can assets be combined with income?
General education only. Each lender sets its own rules, and they change. Nothing here is a promise that a loan will be approved or of any terms. This is not tax, legal or investment advice: for those questions, ask your own CPA, attorney or business manager.
More in savings than in salary?
Tell Sam what you hold and what you are buying. Sam will show you how a lender would read it, in plain words.