Asset Utilization Mortgage Guide
Let Us Help You Find the Right Loan
Non-QM Asset Based Mortgages in Colorado
One of the best ways to let your savings & investments help you get a non-traditional mortgage.
What Exactly is a Asset Utilization Loan?
For high-net-worth Colorado borrowers with substantial assets in an investment account (Brokerage, IRA, 401K, CD, money market) but irregular or low income streams, qualifying for a mortgage through traditional channels can be difficult. This is where specialized lending products like the asset utilization mortgage provide ideal solutions.
Also known as asset-based lending or asset depletion loans, these non-QM mortgages assess a borrower's total assets rather than income. This empowers specific borrowers to achieve their real estate goals of homeownership or refinance when conventional loan guidelines fall short.
Who can benefit from an Asset Utilization Mortgage in Colorado?
This loan program is designed for borrowers who have a high net-worth of liquid assets. Here’s who can benefit the most:
- — People with large balances in their IRA, 401(k) and brokerage accounts
- — Entrepreneurs and self-employed with fluctuating earnings
- — Foreign nationals and expats with offshore assets
- — Trust fund and inheritance beneficiaries
- — Recipients of lawsuit settlements, lotto winnings, insurance payouts
- — Professional athletes, actors/actresses
If you have over $500,000 in verifiable assets but less than 20% of that in annual income, this specialized mortgage solution may be ideal in helping you to qualify. As a mortgage expert, I can advise you if it fits the profile.
Requirements for the non-QM asset utilization loan
Occupancy: primary residence, second home, or rental property.
As of Oct. 1, 2024 in order to qualify you will need to satisfy the above:
- $150k to $3 million— 720 & up credit scores, 10-percent down (90 LTV to refinance)
- $150k to $3 million— 660-679 credit scores, 15-percent down (85 LTV to refinance)
- $3M to $4 million— 25 percent down (75 LTV for refi)
- over $4 million— 30-35 percent down (65 LTV for refi
The above down payments represent a borrower with a 720 score and a primary home. Higher down payments or values are required with lower credit scores or 2-4 units.
Here's how your income is calculated
There are several ways your income is determined from your liquid assets. The first method is your total eligible assets divided by 60 or 84 months. The second way is you simply need to have 125% of the loan amount in your account(s) before and post closing.
Advantages of Asset Utilization Lending
- — Requires no income documentation (no tax returns)
- — Allow assets like retirement and investment accounts
- — Enables jumbo loan amounts up to $5 million
- — Lower down payments possible for strong credit profiles
- — Purchase or cash-out refinance allowed
- — Interest-only payments available
Tap into your substantial savings and let your assets work for you. Get matched with an asset utilization loan officer today to review your options.
Specific scenarios of who it can help
Early Retirees - Buying with IRA
Kevin and Jennifer retire early at 62 with $1.75 million in retirement savings and social security but no employment income. With an asset utilization mortgage, they can qualify to purchase a $900k Beaver Creek ski condo using their IRA balance despite little fixed income.
Entrepreneurs - Low Income with High Net Worth
Brian owns a marketing firm and takes a minimal W-2 salary. His tax returns show $40k income but his stock and Roth IRA accounts reflects a $1 million balance. An asset utilization loan will be approved for Brian on a $750k Denver home purchase based on his 20-percent down payment and credit score over 700.
Foreign Nationals with large assets
Lucien a French Businessman has $2.5 million USD in European assets. As a non-resident alien, it is impossible for him to document U.S. income - but he qualifies for a $1.8 million Englewood luxury home purchase through his offshore savings using an asset utilization mortgage.
Inheritance Beneficiaries
When Debra inherited $1.2 million cash from a family estate, lenders hesitated to use the lump sum payout as qualifying income for a jumbo mortgage. But an asset utilization loan allowed her to use part of the inheritance into a $925k dream home near the Broadmoor in Colorado Springs.
Professional Athletes
When John retired from major league baseball at age 36 he amassed $10 million from investments with a wealth management firm. Traditional banks declined him for financing due to his career status and his new salary as one of many assistant baseball coaches was insufficient to qualify for a jumbo mortgage. But an asset utilization loan enabled him to use his investment accounts to buy a $4.5 million luxury residence in Boulder after selling his current home.
We've also helped a pro basketball player who was playing overseas complete the purchase of a home using his earnings from abroad plus years of savings.
Speed up the Process
The mortgage process for this non-QM loan involves careful verification of your savings and assets by the lender. Having your financial records organized makes underwriting more efficient.
- ● Gather 3 months of account statements for all liquid assets being used - retirement accounts, investment brokerage, money market, CDs, trust disbursements, etc. Adobe .pdf file format statements are preferred.
- ● Keep records of one-time payouts like lawsuit settlements or inheritance that may count toward your overall asset total.
- ● Expect the lender to discount asset balances 30-50% to account for market volatility risk when determining your qualifying amount. The more stable and liquid your assets, the better. 50% discounts apply to IRA's and 401(k)'s of borrower's who have not reached age 59½.
Still have questions? Check these answers
-
Can I qualify for a mortgage without income from a job?
Yes. Not all potential homeowners choose to fund their home loans in the same way. Sometimes, their income can come from non-traditional sources, such as being self-employed or retired. In some cases, the majority of a person’s actual savings can be in the assets they own rather than in their job income. If lenders looked at job income alone, these people would not qualify for a home loan, but the value of their assets could be plenty to assure the lender that they are not a risk. These are some of the reasons why the asset utilization program was created.
-
Do I need to cash in, sell, liquidate or retitle my assets?
No. The assets are only used to justify that you have the ability to repay the loan. Lenders consider liquid assets as collateral, much the same way as W2s and pay stubs are reviewed for a traditional Conventional or Government loan.
-
What type of liquid assets are allowed to qualify?
There are specific asset types that will help you qualify for an asset utilization loan. These include their checking, savings accounts, money market accounts, CD (certificate of deposit), retirement accounts such as a 401(k), an IRA, as well as investment accounts such as mutual funds, stocks, and bonds may also qualify.
-
Can I take cash out with an asset utilization mortgage?
Yes, cash-out refinancing to access home equity is permitted based on your liquid assets and property value. This allows further liquidity.
-
Can I combine the Asset utilization program's income with my job's income?
Yes. This is allowed on non-conforming 30-year fixed loans. Keep in mind whem combining it this way lenders usually cap the "asset program's monthly income" to 25% above your current income. Furthermonre, it cannot be combined with a conventional, FHA or VA loan. It will only be allowed in conjunction with non-QM traditional loan to confirm the ATR requirements.
Areas Served
We serve borrowers throughout the state of Colorado which includes these cities:
- Boulder
- Denver
- Colorado Springs
- Fort Collins
- Longmont
- Broomfield
- Castle Rock
- Greenwood Village
- Aspen
- Centennial
- Avon
- Vail
Disclosure: Minimum loan amount is $150,000 for residential. Loan programs are subject to change per lender at any time until the loan is approved and the rate is locked. Borrowers must be approved by underwriting. Not all applicants will qualify.