Are you trying to get a home loan in Florida but don’t have a steady income?
An Asset Depletion Mortgage lets you qualify for a loan using your savings and investments instead of your regular paycheck.
This option is perfect for people with significant assets who want to buy a home without selling their investments.
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What is an Asset Depletion Mortgage?
An Asset Depletion Mortgage, also known as an asset-based mortgage, is a type of loan that allows borrowers in Florida to qualify based on their assets rather than traditional income.
It enables individuals with significant assets but limited regular income to obtain a mortgage by using their liquid assets as a basis for loan approval.
Key points about Asset Depletion Mortgages:
- Uses the borrower’s assets to calculate qualifying income instead of employment income
- Allows borrowers to leverage liquid assets like savings, investments, and retirement accounts
- Does not require the borrower to actually liquidate or sell assets
- Typically used by retirees, self-employed individuals, or those with irregular income
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How Asset Depletion Mortgages Work
The basic process for an Asset Depletion Mortgage is as follows:
- The lender evaluates the borrower’s liquid assets
- A portion of those assets are converted into theoretical monthly income
- This calculated “income” is used to determine loan eligibility
Typically, lenders will use the following percentages of assets:
- 100% of cash accounts (checking, savings, money market)
- 70-80% of retirement and investment accounts
- 80-90% of stocks, bonds, and mutual funds.
The total asset amount is then divided by a set number of months (often 360 months – the length of a 30-year mortgage) to determine a monthly “income” figure.
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Benefits of Asset Depletion Mortgages
Some key advantages include:
- Allows borrowers with substantial assets but limited income to qualify for mortgages
- Provides flexibility for retirees, self-employed individuals, and others with non-traditional income
- Does not require liquidation of assets – they are only used to demonstrate ability to repay
- Can be used for primary residences or second homes
- May allow for larger loan amounts compared to traditional income-based qualification.
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Qualification Requirements
While requirements can vary by lender, typical criteria include:
- Substantial liquid assets (often $500,000+)
- Good credit score (usually 620+ minimum, 700+ preferred)
- Low debt-to-income ratio (often under 50%)
- Down payment of 20-30%
- Ability to cover closing costs.
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Asset Depletion Home Loan Calculator
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How to Get an Asset Depletion Mortgage
- Evaluate your financial situation and assets
- Research lenders that offer asset depletion programs
- Compare terms from multiple lenders
- Gather required documentation (asset statements, tax returns, etc.)
- Submit application and provide any additional requested information
- Review loan offer and terms carefully before accepting.
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What Are the Risks of an Asset Depletion Mortgage?
- Interest rates may be slightly higher than traditional mortgages
- Not all lenders offer this type of loan program
- Careful asset management is crucial to ensure ability to repay over time
- May have higher fees or stricter requirements than conventional loans.
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Frequently Asked Questions
If you’re considering an Asset Depletion Mortgage in Florida, you might have several questions.
Here are answers to some of the most common inquiries:
What is an Asset Depletion Mortgage?
An Asset Depletion Mortgage is a loan that allows borrowers to qualify based on their liquid assets instead of traditional income sources.
How does an Asset Depletion Mortgage work?
Lenders assess your liquid assets, convert a portion of them into a theoretical monthly income, and use this income to determine your loan eligibility.
Who is eligible for an Asset Depletion Mortgage?
Typically, retirees, self-employed individuals, or those with significant assets but limited regular income qualify for an Asset Depletion Mortgage.
What types of assets can be used for an Asset Depletion Mortgage?
Eligible assets include savings accounts, investments, retirement accounts, stocks, bonds, and mutual funds.
Do I need to sell my assets to get an Asset Depletion Mortgage?
No, you don’t need to liquidate your assets; they are used solely to demonstrate your ability to repay the loan.
What are the benefits of choosing an Asset Depletion Mortgage?
This mortgage option provides flexibility, allows for larger loan amounts, and enables you to maintain your investments while qualifying for a loan.
What are the qualification requirements for an Asset Depletion Mortgage?
Requirements typically include substantial liquid assets (often $500,000+), a good credit score, a low debt-to-income ratio, a down payment of 20-30%, and the ability to cover closing costs.
Can I get an Asset Depletion Mortgage with a low credit score?
While most lenders prefer a credit score of 620 or higher, some may require a score of 700 or above for better approval chances.
Are the interest rates on Asset Depletion Mortgages higher than traditional mortgages?
Interest rates may be slightly higher compared to traditional income-based mortgages, depending on the lender and your financial profile.
How do I apply for an Asset Depletion Mortgage in Florida?
Start by evaluating your financial situation, researching lenders that offer asset depletion programs, comparing terms, gathering necessary documentation, and submitting your application for review.
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See If You Qualify For an Asset Based Mortgage Today
An Asset Depletion Mortgage offers a valuable solution for individuals in Florida with substantial assets but limited steady income to achieve homeownership.
By leveraging your savings and investments, you can qualify for a mortgage without the need to sell your assets.
If you have significant financial resources and are looking for flexible mortgage options, an Asset Depletion Mortgage might be the right choice for you.
Consult with MakeFloridaYourHome to explore your options and take the next step toward securing your home.
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With over 50 years of mortgage industry experience, we are here to help you achieve the American dream of owning a home. We strive to provide the best education before, during, and after you buy a home. Our advice is based on experience with Phil Ganz and Team closing over One billion dollars and helping countless families.