Asset-Based Mortgages: Qualifying on Your Savings and Investments

What does an asset-based mortgage qualify you on?

Some borrowers don't have a steady paycheck, a business bank account full of deposits, or a stream of 1099s — what they have is savings. Maybe you sold a business, inherited assets, built a substantial investment portfolio, or simply saved aggressively over a long career. An asset-based mortgage is designed for exactly that situation: instead of documenting employment or ongoing income at all, we calculate qualifying income directly from your assets.

How is income calculated on an asset-based mortgage?

An asset-based mortgage turns a lump sum into a monthly qualifying income figure in three steps: count each eligible asset at the share the investor allows, subtract the funds you need to close and any required reserves, then divide what remains by the investor's set number of months (often 60).

Here's a simplified example of the first step. The percentages are illustrative, and each investor sets its own: cash usually counts at or near full value, while market and retirement accounts are discounted for volatility and access.

Then:

1. Subtract the funds you'll need to close and any required reserves. That money comes out of the same pool, because the same dollars can't pay for the house and count as income at the same time. Your loan officer works out that figure for your specific purchase.
2. Divide what remains by the investor's set number of months (often 60). At 60 months, every $60,000 left after step 1 supports about $1,000 a month of qualifying income.

The divisor converts a lump sum into a monthly figure without assuming an unrealistically fast drawdown. It's conservative by design: a shorter divisor would produce a higher monthly figure but would imply spending down assets faster than most borrowers intend.

The result becomes the income underwriting uses to evaluate your file, in place of a pay stub, 1099, or bank statement deposit average. No employment is required to qualify — the assets themselves carry the file. To run your own accounts through the same steps, try our asset depletion calculator.

How is Fannie Mae's version different?

Fannie Mae's conventional version is narrower. It uses employment-related assets such as 401(k), IRA, SEP and Keogh balances (checking and savings generally don't qualify unless the money came from one of those sources), subtracts any early-distribution penalty and the funds used for the down payment, closing costs and required reserves, and divides the result by the number of months in the loan's amortization term rather than a set number like 60 (Fannie Mae Selling Guide B3-3.4-06). It's limited to principal residences and second homes, and to purchases and limited cash-out refinances.

Credit, LTV, and Program Limits

The minimum credit score for asset-based qualification is 660. This program is limited to primary residences only — it isn't available for second homes or investment properties. Loan-to-value tops out at 80% up to a $3,000,000 loan amount for a purchase or rate-and-term scenario. If you're looking to pull cash out, LTV is capped at 75% up to the same $3,000,000 loan amount.

Who is an asset-based mortgage for?

We see asset-based qualification work well for:

1. Retirees or near-retirees who have substantial retirement and investment balances but limited or no current employment income.
2. Business owners between ventures — someone who recently sold a company and hasn't started a new income stream yet, but has significant liquid assets from the sale.
3. High-net-worth investors whose wealth sits primarily in a portfolio rather than a paycheck.
4. Anyone with inherited assets who wants to purchase a primary residence without waiting to establish a new income history.

Consider a business owner who sold a company for several million dollars and is deciding what to do next — consult, start a new venture, or step back for a while. That owner may have little or no current employment income to document, but a substantial, easily verified asset base sitting in checking, brokerage, and retirement accounts. A bank statement loan wouldn't apply because there's no ongoing business generating deposits, and a 1099 or W-2 program wouldn't apply because there's no current income at all. Asset-based qualification is built for exactly this gap — it lets the balance sheet itself stand in as the qualifying factor while the owner figures out the next chapter.

If your assets don't quite cover what you need, or if you also have some ongoing 1099 or bank-statement income, it's worth discussing a blended approach with your loan officer — in some cases we can combine documentation types to strengthen a file. And if you do have consistent business deposits, our bank statement loans program might qualify you for a higher amount than the assets-only calculation would on its own.

Which assets count?

Eligible assets include checking and savings account balances, stocks, bonds, and retirement accounts like 401(k)s and IRAs. A few practical notes:

• Assets need to be sourced and seasoned — underwriting will want to see where large recent deposits came from.
• Market and retirement accounts usually count at less than their statement balance, and retirement accounts may be discounted more if you're below the age for penalty-free withdrawals; your loan officer will walk through exactly how your specific accounts are treated.
• This program calculates income from assets — it doesn't require you to liquidate anything to qualify.

Step-by-Step: How the Process Works

1. Gather statements for every account you want counted — checking, savings, brokerage, 401(k), and IRA.
2. We count each eligible balance at the share the investor allows, subtract the funds you need to close and any required reserves, and divide what remains by the investor's set number of months (often 60) to calculate your qualifying monthly income.
3. We check that number against the loan amount you're targeting, along with the 80% (purchase) or 75% (cash-out) LTV limits up to $3,000,000.
4. Underwriting verifies and sources the assets, confirming balances and the origin of any large or recent deposits.
5. We finalize your file for your primary residence purchase, rate-and-term refinance, or cash-out refinance.

How does asset-based compare to other documentation paths?

If you have both meaningful assets and ongoing self-employed income, it's worth exploring which single program — or which combination — gets you to the strongest qualifying number. That's exactly the kind of comparison we walk through when you take our quiz.

Frequently Asked Questions

Do I need any employment or income documentation at all? No employment documentation is required for this program — qualifying income is calculated entirely from the eligible assets you're using, each counted at the share the investor allows, minus the funds you need to close and any required reserves, then divided by the investor's set number of months (often 60).

Can I use this program for a second home or investment property? No. Asset-based qualification is currently limited to primary residences only.

What credit score do I need? 660 is the minimum FICO score required for this program.

Can retirement accounts really count toward my qualifying income? Yes, checking, savings, stocks, bonds, 401(k), and IRA balances are all eligible asset types. Market and retirement accounts usually count at less than their statement balance, and your loan officer will walk through how your specific account types and any access rules factor into the calculation.

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If your income doesn't tell the full story but your assets do, an asset-based mortgage might be the most direct path to a primary residence purchase or refinance. Take our quiz to get matched with the right program, or reach out directly. Zac Cook at 480-406-2016 or Tanner Cook at 469-405-2690 on the Cook Brothers team at Cornerstone First Mortgage can run the asset calculation against your specific accounts and show you where you land.

Zac Cook is a licensed mortgage loan originator (NMLS #2111496) with Cornerstone First Mortgage, LLC (NMLS #173855). This article is educational and is not a commitment to lend or financial advice. Non-QM loan programs require alternative income documentation; all loans are subject to underwriting approval, income and asset verification, and an ability-to-repay determination. Not all applicants will qualify. Programs and guidelines are subject to change without notice. Equal Housing Opportunity Lender.