How to Get an Asset-Based Mortgage

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Contributor, Benzinga
November 1, 2023

Jump straight to it: The best way to get an asset-based mortgage is by working with the company CrossCountry Mortgage.

Obtaining an asset-based mortgage is an alternative method for borrowers who want to qualify for a loan using their assets, regardless of what their taxable income is. Many people live solely off of their assets, which makes it hard to produce a paycheck to a lender in an attempt to secure a traditional mortgage. With this asset-based mortgage, borrowers can use their assets as collateral to get approved for a loan. 

What is an Asset-Based Mortgage?

An asset-based mortgage is a loan product that allows a lender to confirm approval based on the assets the borrower possesses. This way, a borrower can use investments to gain approval for a loan, rather than showing payment from an employer. While a downpayment and decent credit score are still necessary, this non-traditional mortgage is a great option for investors who wish to use their assets instead of their cash. It will allow you to borrow the loan amount you need, as long as you can prove that your assets can cover the loan term.

How Does an Asset-Based Mortgage Differ From a Traditional Mortgage?

An asset-based mortgage is an alternative mortgage that can be used by anyone with assets. Pretty much any assets work, as we will discuss later. Unlike a traditional mortgage, you do not need to show income verification. This is a much more flexible approach to borrowing. As long as you can prove that you can make your mortgage payments and have enough assets as collateral, an asset-based mortgage can be a great loan option for an investor or self-employed borrower. 

Not everyone can easily be approved for a traditional mortgage, especially if most of their money comes from assets and investments. If you have had trouble getting approved for a traditional mortgage due to inconsistent paystubs, employment status, or banking history, take a look at your assets and speak to a lender about how an asset-depletion loan could be the right lending path for you. Interest rates are generally lower than traditional loans as well since lenders know that they can recoup the money using your assets should you default on the loan. 

Businesses are also more likely to consider asset-based financing over traditional financing, as the loan isn’t based on the future projected income of the company, but rather collateral that is already owned. Machinery, equipment, inventory, and real estate can all help to secure a company’s asset depletion loan, helping to cover cash flow demands during unexpected delays or circumstances. 

Why Not Buy a House in Cash?

If you have the means to purchase a property in cash, you surely can do so. However, it may not be wise to drop all of your cash on a single property. This ties up your cash for other investments and may keep your options limited. Instead, you could use your assets to get approved for a home loan. This will help to spread the payments out, keeping money open and easily accessible to you for future investments. 

This alternative mortgage will keep money on hand for you to use as needed, especially if it’s not a long-term investment. You will have the cash to renovate, repair, and resell a property. Then pay off the remainder of the loan with the profits. Keep your cash, use your assets. You don’t need to worry about current mortgage rates, dealing with a mortgage broker, adjustable rates, the down payment tied to a conventional or government-backed loan, mortgage calculators and more.

Documents Required for an Asset-Based Mortgage

Although an asset-based mortgage is commonly compared to a no-doc mortgage, there are still documents involved. They are just different documents than a conventional or traditional loan - which will require a look at your work history, pay stubs, and tax returns. Here is what an asset-based mortgage lender is interested in:

Cash and Cash Equivalents

This includes cash on hand and a look into your bank accounts. A healthy amount of cash and cash equivalents reflects your ability to pay any short-term debt and is reassuring to the lender. 

Liquid Assets

These are your marketable securities. Your liquid assets can be turned into cash quickly if needed. These assets include any common stock, money market instruments, treasury bills, etc., that you currently own and are considered safe investments by lenders. Liquid assets are as close to cash as you can get, as long as they are in an established market with readily available buyers, with ownership easily transferable.

Fixed Assets

Your fixed assets are more permanent assets that would take longer to convert to cash and may come with some complications or consequences to secure. This may include real estate that you already own which you would have to sell (perhaps below value depending on the market) if you were in a tight financial spot, vehicles - which decline in value, and annuity and retirement accounts that will force a penalty on you if you need to access them early. Net worth is an important factor in determining your financial standing.

Equity Assets

These are assets that you can borrow against if needed, but any liabilities need to be first factored in and deducted from the total value. This can mean a business that you have equity in, another home or property, a car loan, or even a retirement account. Any liability, outstanding loan, or debt against these assets including a home loan or student loans will be deducted from the current value to show the amount of equity you hold. 

Fixed-Income Assets

Some investors may have fixed-income assets which allow for a set cash flow. These may be in the form of corporate or government bonds, mutual funds, etc. The low-interest rates and low market volatility helps to keep the income somewhat constant and reliable. 

Physical Assets

Your tangible assets may be your primary residence, a vacation home, any land you own, rental or any investment property, jewelry, art, vehicles, livestock, etc. This is actual property that you own that has economic or investment value. These are real items that can be sold if a borrower cannot repay their home loan. 

Illiquid Assets

These are assets that cannot be turned around and sold quickly or very easily. This includes things like land and real estate, or even antiques and collectibles. They are assets that take more time to sell, may not have ready and willing buyers, or may take a deep loss in value when sold. For real estate investors, you should consider the potential risks of illiquid assets.

It is worth mentioning that the lender has the final say in what percentage of your assets they will let you borrow. You may be eligible to borrow 85% of what your highly liquid assets are worth, while illiquid assets used as collateral may only get you 50% of their value. This is due to the potential losses in market value and also the costs associated with changing the assets to cash. Loan programs and security policies vary for different borrowers, such as business owners, real estate investors, retirees, and homeowners.

Also, please keep in mind that many agents will want to see your financials before even showing you houses that you believe are in your price range. While agents are not mortgage lenders, they have an idea of who will qualify for what sort of house, meaning that you should reach out to a home loan lender first so that you can get pre-approved.

How to Apply for Asset-Based Mortgage

To apply for an asset-based mortgage, you should follow a few key steps. First, you need to gather all the necessary financial documents, including proof of income, bank statements, tax returns, and any documentation related to the assets they plan to use as collateral.

Next, you should research and choose a reputable lender that specializes in asset-based mortgages. You can compare interest rates, loan terms, and customer reviews to find the best fit for their needs.

Once a lender has been selected, you should complete the loan application provided by the lender. This application typically requests personal and financial information, including details about the assets being used as collateral.

After submitting the application, you should be prepared for the lender to conduct a thorough evaluation of your financial situation and the collateral being offered. This may involve a review of the borrower's credit history, an appraisal of the assets, and a verification of income.

If the lender determines that you meet their criteria and the collateral is sufficient, they will issue a loan approval. At this point, you should carefully review the terms of the loan, including the interest rate, repayment schedule, and any fees associated with the mortgage.

If you are satisfied with the terms, you can accept the loan offer and proceed with any required documentation. This may include signing loan agreements, providing additional documentation, and completing any necessary legal steps.

Pros of Asset-Based Mortgages

Asset-based mortgages have become increasingly popular in the real estate industry due to their numerous advantages. Let's take a look at some of the pros of asset-based mortgages and why they have gained traction in the market.

  • Provides you an opportunity to leverage your assets as collateral for a loan
  • Allows you who have valuable assets to secure funding that you may not have been able to obtain through traditional means
  • Can be used for various purposes, such as purchasing real estate, funding business operations, or consolidating debt
  • Allows you to own and use of your assets while still accessing the funds you need
  • Can be a viable option if you have less-than-perfect credit, as your valuable assets serve as security for the loan

Cons of Asset-Based Mortgages

While asset-based mortgages offer a multitude of benefits for borrowers, it is important to acknowledge that there are also disadvantages associated with them. It is essential for you to consider these cons before pursuing an asset-based mortgage to make informed decisions and mitigate potential risks.

  • Often come with higher interest rates compared to traditional mortgages
  • May have stricter eligibility requirements, making it difficult for some borrowers to qualify
  • If you fail to make payments, there is a risk of losing these assets as collateral
  • You may limited options for refinancing, as lenders may be hesitant to provide refinancing options based on the value of the assets
  • May come with less flexibility in terms of repayment options

Similarities Between Conventional and Asset-Based Mortgages

When you have low risk tolerance as it relates to mortgages, you still must complete many of the same steps involved with a conventional mortgage. An asset-based mortgage still requires upfront costs like:

  • Commission to a real estate agent
  • Closing costs (title, attorneys, etc.)
  • Home inspection
  • Termite letters (where required)
  • Thousands of dollars in additional repairs or assurances (in some cases)
  • Paying an insurance carrier for the 1st year of home insurance

Compare Asset-Based Mortgage Lenders

If you’ve had trouble with traditional mortgages and don’t fit the mold for their guidelines and requirements, check out an asset-based mortgage. Benzinga can offer insight and reviews on top providers to help lead the way to your successful alternative mortgage. Check out our top picks for asset-based mortgage lenders.

Asset Qualification With Angel Oak Mortgage Solutions

Angel Oak Mortgage Solutions is a full-service mortgage lender offering traditional and portfolio Non-QM mortgage loans. Angel Oak’s Asset Qualifier product gives homebuyers the ability to qualify for a mortgage using their liquid assets. Borrowers must have a minimum of $500,000 in assets post closing. Qualifying assets include retirement, checking, savings accounts and stocks.

  • Available for purchase, cash-out or rate-term refinance
  • No employment or income information is required
  • No debt to income (DTI) requirements
  • Primary residence
  • Five years seasoning for foreclosure, short sale, or bankruptcy
  • Loans up to $3 million
  • Borrowers must have a minimum of $500,000 post closing assets
  • All assets must be sourced and seasoned for a minimum of six months
  • Non-warrantable condos allowed

Asset Based Mortgage: A Valuable Financial Tool for Borrowers

Asset-based mortgages can offer flexibility to borrowers in need of a more creative lending solution. Using a combination of assets, borrowers are able to successfully secure a mortgage without having to verify a traditional income. For investors, this can be a great way to obtain a mortgage without liquidating assets or depleting cash reserves. Benzinga always has the best financial information and alternative options to keep your financing and investments successful and uncomplicated. Be sure to check back here for all of your investment needs. 

Frequently Asked Questions


Can I get a mortgage without pay stubs?


Yes, as long as you have enough assets to put up as collateral. Lenders are open to financing a loan with just proof of cash and assets in an asset-based loan. Having an abundance of assets shows that you are good for the money and can properly pay back a loan. However, if you fail to pay back the loan the lender can seize your assets.  


What is a no income check mortgage?


A no income check mortgage also called a no doc mortgage, is similar to an asset-based mortgage in the sense that the lender can take non-standard documentation into consideration for the approval of a loan. They will look at your assets, cash flow, and any home equity you may have. Sometimes with this type of loan, however, you don’t even have to provide documents proving that you have assets. This type of loan used to be more common among the self-employed, independent contractors, and seasonal workers that have a hard time verifying any documentation that they have regular income or assets. No income check mortgages have, however, rarely been used after the 2008 housing market crash. 


What are the interest rates for asset based mortgages?


Interest rates for asset based mortgages can vary depending on the lender, your creditworthiness, and the specific terms of the loan. It is advisable to compare rates from different lenders and consult with a mortgage professional to find the best rates available.

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