Is it possible to get a mortgage without having to document income? This is a question many non-traditional home buyers ask when beginning their homeownership journey. The answer is yes! In fact, there are multiple options for loans when it comes to using other financial qualifications besides typical W-2 income. In today’s post we’ll highlight a mortgage solution that may be ideal for using assets instead of income to purchase a home.
Assets vs Income
So what is the difference between assets and income? With a traditional mortgage using income to qualify, the borrower’s earnings are calculated (the amount of money they make through employment). By contrast, an asset qualifier mortgage allows the borrower to use money in the form of verified assets to qualify. Verified assets can include the following:
- Savings from a checking and/or savings account
- Investments such as stocks and bonds or mutual funds
- Money market accounts
- Marketable securities
- Retirement accounts*
*Even if the borrower has not yet reached retirement age, funds from their retirement account may still be used. Seventy percent may be used if the borrower is not yet retirement age and 80 percent may be used if the borrower has reached retirement age.
Asset Qualifier Mortgage from Luxury Mortgage®
At Luxury Mortgage® we’re very pleased to offer a wide selection of home financing solutions to meet the needs of today’s diverse home buyers. That’s why we offer the Asset Qualifier Mortgage among our non-traditional loan options.
Our Asset Qualifier Mortgage offers flexibility in that it allows borrowers to use assets (like the ones mentioned above) to qualify for the loan instead of traditional income. This can provide a valuable alternative to borrowers who have substantial assets but who lack consistent, documentable income. A few borrowers who may benefit from the Asset Qualifier Mortgage include…
- Freelancers or Contract Workers
- Small Business Owners
Benefits of the program include the ability to borrow up to 80 percent of the loan value, credit scores as low as 580 allowed, loan amounts up to $6,000,000 and competitive interest rates. The Asset Qualifier Mortgage can be used to finance a variety of property types as well, including 1-4 unit homes, PUDs, warrantable condos, and non-warrantable condos on a case-by-case basis.
For clarification, warrantable condos are condos that have met certain guidelines set by Fannie Mae and Freddie Mac. For the most part, these condos are able to be purchased through conventional financing. Non-warrantable condos however, do not meet one or more guidelines set by Fannie and Freddie, and are therefore more difficult to obtain financing for. The Asset Qualifier Mortgage may be a good alternative to conventional financing if you are interested in buying a non-warrantable condo.
Since this loan program differs greatly from traditional mortgages in that it does not require income documentation, the guidelines for qualification are quite different as well.
In order to use verified, documented assets to qualify for the loan, the assets in question must meet the following requirements:
- Assets must be 100% of the loan amount
- Required reserves (talk to your loan officer for specific guidelines)
- Funds to close
- 60 months of other debt service
- 60 months of the sum of net rental loss on any individually owned properties
Additional qualifying factors will include credit history, credit score and appraisal. For loans in excess of $1.5 million, two appraisals may be required. Talk to your Luxury Mortgage® loan officer for details.
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