All your life you’ve been working hard and you have been able to save wisely and accumulate a significant amount of money. However, you want to buy a home but you are not able to do so because of the usual challenges – you don’t have a steady paycheck. Here’s the good news: with an asset depletion mortgage, your assets, not your income, could be your way to homeownership.
If you’re retired, self-employed, or have a lower income but have built up a nice chunk of assets in Long Beach or even Athens, GA, this type of mortgage might be perfect for you. Let’s keep it simple and show how using the assets you already have can help you finally own that home you’ve been dreaming of.
What Is an Asset Depletion Mortgage Exactly?
An asset depletion mortgage is a concept which takes into consideration the value of your real estate instead of relying on your salary or W-2s, What happens is your mortgage lender uses your assets—like savings, investments, or even the value of real estate you own—to calculate your “income.” As you know, for the typical mortgage, your monthly income comes from your job. However, with an asset depletion mortgage, it’s your liquid assets that do the talking.
Here’s how it works: the lender looks at your total liquid assets (think checking accounts, stocks, and retirement funds) and divides that number by 360, the typical length of a mortgage in months. This divided figure becomes your “monthly income” in the lender’s eyes. For example, if you have $2 million in assets, the lender will calculate your income as roughly $5,555 per month—enough to qualify for a mortgage, even if your paycheck says otherwise.
This is great news for Long Beach retirees living off investments or self-employed individuals in Athens, GA, whose tax returns don’t reflect their true financial stability.
How Can You Get an Asset Depletion Loan?
Okay, so I guess I got you excited about the possibility of buying that beachfront property in Long Beach, However, there are some things we must clear out first. To qualify for an asset depletion mortgage, you’ll need to meet a few basic requirements:
- You’ll need enough in your accounts (like savings, investments, or even business ownership) to convince the lender you can afford the loan.
- Typically, lenders look for a credit score of 680 or higher.
- Expect to put down at least 20% on the property.
Let’s say you’ve got $3 million in assets, a solid credit score, and are ready to invest in a rental property in Long Beach. Using an asset depletion mortgage, you could qualify for a significant loan without ever showing a traditional paycheck.
Asset Depletion Mortgage in Action
Now, let’s get into some practical examples.
Say you’re 55 years old, with $2.5 million in investments and another $500,000 in your retirement account. A lender will take 70% of your retirement funds (about $350,000) and combine that with your $2.5 million in liquid assets, giving you a total of $2.85 million to qualify with. Divide that by 360, and your “income” for mortgage purposes is about $7,916 per month. Not bad for someone not drawing a salary, right?
Even if you’re eyeing a property in Athens, GA, the same principle applies. Whether it’s a quiet place in the suburbs or a rental property for extra income, this type of mortgage allows you to leverage your savings and investments without relying on a traditional job.
Where Do Property Managers Fit Into This?
If you’re buying a property in Long Beach, having a property manager on your side can be a total game-changer. They don’t just handle the day-to-day stuff; they help you get the most out of your investment, especially if you’re using an asset depletion mortgage for a rental. The more rent you bring in, the less you’ll need to dip into your personal assets.
In a hot rental market like Long Beach, a property manager makes sure your investment stays profitable by managing tenants, keeping the property in shape, and staying on top of local laws. And if you’re investing in a rental in Athens, GA, a good property manager can still help boost your returns and protect your assets.
Eligible Assets: What Counts?
Now, let’s see which assets are qualifying for an asset depletion mortgage. Here’s what lenders typically consider:
- Savings accounts, checking accounts, and money market accounts are liquid assets usually counted at 100% of their value.
- Stocks, bonds, and mutual funds: Lenders will often count 70-80% of their current value.
- Retirement accounts: If you’re nearing retirement age, you may get 70-80% credit for these funds.
- Equity in real estate: If you have significant equity in properties in Long Beach or Athens, GA, this could be factored into your asset base.
The specific percentage of assets counted varies by lender, so it pays to shop around for the best deal.
Why Use an Asset Depletion Mortgage?
An asset depletion mortgage is ideal if:
- You’re retired and don’t have a steady income stream.
- You’re self-employed with unpredictable income.
- You have significant assets in the U.S., and you’d rather use those to secure a home loan than show traditional income documents.
- You have a sizable down payment saved up.
But it’s not just about qualifying for a loan. In markets like Long Beach, where home values are high, being able to leverage your assets puts you at an advantage when competing for prime real estate. Athens, GA, might offer a slower-paced market, but even there, an asset depletion mortgage can give you the flexibility to buy a home without relying on traditional income sources.
Property Managers: Helping You Maintain Financial Health
Whether you’re in Long Beach or Athens, GA, hiring a property manager can also protect your assets in the long term. They handle everything from finding tenants to maintaining the property, so you don’t have to worry about unexpected expenses or vacancies draining your finances. With asset depletion mortgages relying heavily on keeping your assets healthy, having a professional to manage your property can help safeguard your financial future.
Risks to Keep in Mind
Asset depletion mortgages can be a clever way to qualify for a loan, but they’re not without risks. Since you’re using your assets to qualify, it’s important to make sure you don’t drain those funds too fast. Plus, some lenders might hit you with higher fees because of the extra steps involved in verifying your assets.
And let’s not forget, defaulting on the loan could mean losing the assets you’ve worked so hard to build. That’s where having a trusted property manager can really make a difference, helping you keep a steady rental income and manage your investment smartly.
Conclusion: Is an Asset Depletion Mortgage Right for You?
If you’ve accumulated substantial assets and want to buy a home in Long Beach or Athens, GA, without relying on traditional income streams, an asset depletion mortgage could be the perfect solution. With the help of a savvy property manager, you can ensure your investment continues to grow while maintaining your financial stability.
Ready to unlock the door to homeownership? Your assets might just be the key.