Asset Utilization Loans:

Asset Depletion Method:

The lender divides your total eligible assets by a specific number of months (typically 36 or 60) to determine your monthly qualifying income.

Example:

If you have $500,000 in eligible assets and the lender uses a 60-month depletion period, your monthly qualifying income would be $8,333.33.

Additional Factors:

Lenders may also consider your debt-to-income ratio (DTI) and other financial factors when determining your loan eligibility and terms.

Yes, Some Lenders Allow It:

While primarily designed for primary residences and second homes, some lenders may offer asset utilization loans for investment properties under certain conditions.

Stricter Requirements:

Expect higher down payment requirements and potentially stricter qualification criteria for investment properties.

Consider DSCR Loans:

If your primary goal is to finance an investment property, explore Debt Service Coverage Ratio (DSCR) loans, which qualify you based on the property's rental income.

Liquid Assets:

Lenders typically prefer liquid assets that can be easily converted to cash.

Ineligible Assets:

Some assets, such as personal property, collectibles, or non-vested stock options, may not be considered eligible for asset utilization loans.

Consult with Your Lender:

Discuss your specific asset portfolio with your mortgage professional to determine which assets can be used for qualification.

Variety of Terms:

Asset utilization loans are available with various loan terms, typically ranging from 15 to 30 years.

Fixed-Rate and Adjustable-Rate Options:

You can choose between fixed-rate and adjustable-rate mortgages (ARMs), each with its own advantages and considerations.

Tailored to Your Needs:

Discuss your financial goals and risk tolerance with your mortgage advisor to select the best loan term for your situation.

Not Exclusively:

While asset utilization loans are popular among high-net-worth individuals, they can also benefit others with significant assets but limited traditional income, such as retirees or self-employed individuals with fluctuating income.

Asset Requirements:

The minimum asset threshold varies by lender and loan program, so even individuals with moderate asset levels may qualify.

Consult with a Lender:

Discuss your financial situation with a mortgage professional to explore your eligibility for an asset utilization loan.