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What is an Asset-Based Mortgage?
An asset-based mortgage—also known as an asset depletion mortgage—is a type of home loan where a borrower’s assets (such as investment portfolios, savings, or retirement accounts) are used to qualify for the loan rather than traditional income streams. This lending option is ideal for high-net-worth individuals (HNWIs) with significant assets but limited verifiable income.
Unlike conventional mortgages, which rely heavily on W-2s, pay stubs, or tax returns, asset-based mortgages focus on liquidity and the ability to repay through assets held.
Who Are Asset-Based Mortgages For?
Asset-based loans are particularly beneficial for:
- Retirees living off investment income
- Entrepreneurs with irregular or fluctuating income
- Real estate investors with substantial portfolios
- Trust fund beneficiaries
- Self-employed professionals whose adjusted gross income doesn’t reflect true cash flow
If your net worth is substantial but your taxable income is low, this mortgage may offer a practical solution for securing high-value properties.
How Asset-Based Mortgages Work
Lenders use a formula to determine how much of your liquid or semi-liquid assets can be used as income for mortgage qualification. Typically, they’ll take a portion of your eligible assets, divide them by a term (often 60 months), and use the result as your “monthly income.”
Commonly Accepted Assets:
- Checking and savings accounts
- Brokerage accounts (stocks, bonds, mutual funds)
- Retirement accounts (IRA, 401(k) – typically discounted or restricted)
- Trust fund distributions
Assets Usually Not Accepted:
- Business holdings
- Real estate (other than cash-out equity)
- Non-vested stock options
- Illiquid investments
Benefits of Asset-Based Mortgages
1. Income Flexibility
No need to prove conventional income. Assets do the talking.
2. Tailored for HNW Borrowers
This product is designed with high-net-worth financial profiles in mind.
3. Competitive Interest Rates
Despite being a non-QM (non-qualified mortgage), asset-based loans can offer competitive pricing when backed by strong assets.
4. Streamlined Documentation
Lenders may waive tax returns, W-2s, or even employment verification.
Drawbacks and Considerations
- Higher Down Payments: Typically 25–30% minimum.
- Limited Lender Pool: Fewer institutions offer these loans.
- Potential for Higher Rates: If your credit or asset mix is less than ideal.
- Loan Size Caps: Some lenders may cap loans under jumbo thresholds.
Qualification Requirements
While requirements vary by lender, here’s a general overview:
| Requirement | Typical Guideline |
| Minimum Assets | $1 million+ (including eligible liquid assets) |
| Credit Score | 700+ preferred |
| Debt-to-Income (DTI) | Evaluated differently—focus is on asset depletion model |
| Down Payment | Minimum 25–30% |
| Property Type | Primary, second homes, investment properties |
FAQ: Asset-Based Mortgage Lending
Are asset-based loans the same as stated income loans?
No. Stated income loans allow borrowers to declare income without verification, while asset-based loans use actual assets to calculate an income-equivalent for qualification.
Can I use retirement accounts to qualify?
Yes, but only a percentage of retirement assets may be counted, especially if you’re not of retirement age. For instance, 70% of a 401(k) balance might be used if you’re over 59½.
Can I still have a mortgage if I have no income?
Yes. With sufficient qualifying assets, a lender may approve a mortgage purely on the asset depletion model.
Read Next
If you’re exploring asset-based financing, here are additional reads to help you navigate your homeownership journey:
Get Expert Financing
- Matched with investor-friendly lenders
- Fast pre-approvals-no W2s required
- Financing options fro rentals, BRRRR, STRs
- Scale your portfolio with confidence
Our advice is based on experience in the mortgage industry and we are dedicated to helping you achieve your goal of owning a home. We may receive compensation from partner banks when you view mortgage rates listed on our website.
