Asset Based Loans Qualification Criteria

Reserves are generally not required for the strict Asset Depletion/Asset Qualifier programs when assets are the sole source of income. However, if the loan is over a certain amount, or if Asset Utilization is used supplementally, reserves may be required.

Under certain programs, such as NQM Funding’s Flex Supreme, the asset depletion income must be the sole source of qualifying income. However, other Non-QM programs (Asset Amortization/Utilization) allow it to be combined with other income sources (like W-2s, rent, or pension).

Maximum LTVs for Asset Depletion Loans are typically conservative. For purchase or rate/term refinance, LTVs generally range up to 85%. However, Cash-Out Refinances are often not eligible, and if allowed (Asset Utilization), LTV may be capped lower, such as 60% LTV/CLTV.

No, retirement funds are often discounted. For Borrowers under 59 ½, 70% of the vested value may be counted (some sources indicate 60%). For borrowers 59 ½ or older with unrestricted access, 80% of the vested value may be counted.

Funds designated for the down payment, closing costs, and required reserves must be excluded (subtracted) from the total assets before the remaining balance is used to calculate the imputed monthly income.

Assets must be verified as seasoned for a minimum period. This requirement is generally 90 days (three months). Some programs require 120 days of seasoning.

Borrowers must typically have a strong credit profile. A minimum credit score of 680 or higher is often preferred. For some high-end programs or scenarios, a minimum FICO of 700 is required.

Asset Depletion Loans are generally restricted to financing the borrower’s Primary Residence or a Second Home. They are typically not eligible for investment properties, as DSCR loans are tailored for that purpose.

The standard method involves dividing the borrower’s Net Qualifying Assets over a fixed term, typically 84 months (seven years), to determine their Imputed Monthly Income. Some programs, like for Passive Asset Utilization, may use a 10-year (120 month) term.

The Asset Depletion Loan is a Non-QM (Non-Qualified Mortgage) solution that calculates a borrower’s qualifying income based on the value of their liquid assets (like cash reserves, investments, or retirement funds), rather than relying on traditional income documentation. This is used to demonstrate the borrower’s Ability-to-Repay (ATR) the mortgage.