The Asset Mortgage

The Asset Program looks only at your assets to determine your eligibility.  A debt to income ratio calculation is not used.  Income and employment are not necessary.  Rather, you only need to have sufficient post-closing liquid assets that meet the requirements outlined below.  In addition to having sufficient liquid assets you should also have residual income of $1,300 - $1,500/month.  The residual income is calculated using only your assets as outlined below.  You may use other income documentation options to satisfy the residual income calculation such as fully documenting employment or investment property income if you wish. 

All assets used in this calculation must be held in a US FDIC insured institution.    All assets must have been in your possession/name for at least 6 months.

                                                                                                     QUALIFIED ASSETS                                                                                       

The following assets are considered Qualified Assets and can be utilized to calculate income:

• 100% of checking, savings, and money market accounts
• 80% of the remaining value of stocks & bonds
• 70% of retirement assets
• Personal funds in the borrowers name only (business funds and joint accounts with individuals not on the loan are not eligible).
• 100% of the Cash Surrender Value of an annuity or life insurance contract
• Bitcoin: must be liquidated and deposited into a United States bank/financial institution account. Deposit must be seasoned for a minimum 60 days.
• The proceeds of sale from documentable assets owned by the borrower over the prior six (6) months 
• Revocable Trust accounts will be reviewed on a case by case basis.  In these instances, the borrower must be the sole beneficiary and sole trustee. 

                                                                                    CALCULATION OF REQUIRED ASSETS

There are 4 ways to meet the asset requirements under this program:

Method One - Mortgage Only:   Your total post-closing assets must equal 125% of all outstanding mortgage debt for which you have personal liability.  

Method Two - Simplified:   Your total post-closing assets must equal 110% of the subject loan amount on the subject property plus 25% of all your other outstanding debt (mortgage and consumer).

Method Three - Liquidity:  After deducting the down payment, closing costs, and the reserves required to qualify, you must have the lesser of the following:

• (a) 1.5 times the mortgage loan amount, or
• (b) $1mm in Qualified Assets.
• Whether (a) or (b) is used, you must have at least $450k in liquid assets.

Method Four - Traditional:  After deducting the down payment and closing costs, you must have the greater of the sum of the following items:

• 100% of the loan amount.
• 60 months of all revolving installment, alimony/child support, and **mortgage related expenses.
• Subject property reserves requirements  

**If the mortgage related expenses are connected to another investment property then the PITIA for that property can be excluded from this part of the calculation provided the investment property has positive cash flow.   If the investment property has negative cash flow, any net negative rental amount must be multiplied by the 60-month term with the resulting amount added to the required assets. Leases + 3 month’s most recent rent receipts are required to document the rental income received for an investment property. 

Short-term rentals are permitted. Proof of receipt for the most recent 12 months is required. You can use the documented 12 months average of payments to derive the monthly rental amount average. If no rent is received then zero is used for that month. 12 months banks statements or a ledger from a national short term rent institution (Airbnb, VRBO, Homeaway) may be used to verify short term rental income.

                                                                                                      RESIDUAL INCOME

A monthly residual income calculation must be completed. The formula for this calculation is:

• Total Assets (as detailed in Qualified Assets above) Minus your down payment and/or closing costs/ 60 months = Total Monthly Income
• Total Monthly Income Minus Total Monthly Debt Obligations (Expenses) = Monthly Residual Income
• Monthly Residual Income must meet or exceed $1,300 - $1,500
• Note: Required reserves are not deducted from Total Assets when calculating residual income.     

Below we will take a look at the required documentation necessary to satisfy the criteria of the Asset Program.  First let's start with some characteristics that are common to the Asset Program:

                                                                                             ELIGIBLE PROPERTY TYPES

• 1 Unit Properties
• 2-4 Unit Properties
• Condominiums (Both warrantable and non-warrantable)
• Townhouses/Planned Unit Developments

                                                                          MINIMUM DOWN PAYMENT PURCHASE TRANSACTION

Your minimum down payment will depend on your credit score as follows:

• 720 or above = 10% down  (Condos & 2-4 unit properties may require 15% down)
• 680 - 719       = 15% down
• 660 - 679       = 20% down
• 640 - 659       = 25% down
• 620 - 639       = 30% down
• 600 - 619       = 40% down