FAQs

An Asset Qualifier loan is a Non-QM mortgage that allows an eligible borrower to qualify using verified financial assets instead of relying primarily on traditional employment income.

The borrower’s assets are reviewed after accounting for:

• Down payment
• Closing costs
• Required payoffs
• Other funds needed to complete the transaction

The remaining post-closing assets must meet one of Luxury Mortgage’s Asset Qualifier calculation methods.

Why it matters:

A borrower may have substantial wealth but show limited taxable or monthly income.

For example, the borrower may:

• Be retired but have significant savings and investments
• Have recently sold a business
• Have recently sold real estate
• Receive income that is irregular or difficult to document
• Hold substantial retirement or brokerage assets
• Have strong liquidity but not meet traditional income requirements

An Asset Qualifier loan evaluates the borrower’s overall financial position rather than requiring the borrower’s finances to fit a traditional employment-income model.

Asset Qualifier financing may be worth considering when your borrower:

• Has significant liquid assets
• Does not have enough documented monthly income
• Is retired or approaching retirement
• Recently sold a business or property
• Has a large brokerage or retirement portfolio
• Receives irregular distributions or investment income
• Wants to avoid qualifying with tax returns
• Has assets that are easier to document than income
• Has strong credit and liquidity but does not qualify conventionally
• Is purchasing before beginning a new income stream

Broker Tip:

When a borrower says, “I have plenty of money, but my income does not look right on paper,” review the Asset Qualifier program before assuming the borrower cannot qualify.

An Asset Qualifier loan may work well for:

• Retirees
• High-net-worth borrowers
• Business owners
• Entrepreneurs
• Investors
• Borrowers who recently sold a business
• Borrowers who recently sold real estate
• Borrowers living from accumulated wealth
• Borrowers with large retirement accounts
• Borrowers with substantial marketable securities
• Borrowers taking time away from employment
• Borrowers whose income is temporarily lower than their overall financial strength

The program is not limited to self-employed borrowers. The key question is whether the borrower has enough eligible post-closing assets to satisfy the applicable calculation.

Program eligibility depends on the borrower’s credit profile, transaction, occupancy, loan amount, and applicable Luxury Mortgage eligibility matrix.

• 15-, 30-, and eligible 40-year terms
• First-time homebuyers permitted under applicable requirements
• Non-occupant co-borrowers permitted in eligible scenarios
• Multiple ways to calculate the required post-closing assets
• Loan amounts up to applicable program limits
• Cash-out opportunities subject to program requirements

One of the biggest advantages of Luxury Mortgage’s program is the flexibility available for calculating self-employed income.

Method 2 –

Simplified

Under Method 2, total eligible post-closing assets must equal:

110% of the Subject Mortgage Amount

Plus

25% of All Other Outstanding Mortgage and Consumer Debt

Certain debts may be excluded when the borrower meets the applicable documentation requirements.

Simplified Example

The borrower has:

• New subject mortgage: $1,000,000
• Other mortgage and consumer debt: $500,000

Calculation:

• $1,000,000 × 110% = $1,100,000
• $500,000 × 25% = $125,000

Total required post-closing assets:

$1,100,000 + $125,000 = $1,225,000

When Method 2 May Work Well

Method 2 may be useful when the borrower:

• Has significant assets
• Has other debts, but not enough to make the calculation excessive
• Wants a simpler calculation than a full monthly debt-service analysis
• Has several properties or consumer obligations

Up to 10% of the assets used to meet the requirement may come from eligible cash-out proceeds under Methods 2 and 3.

Method 4 –

Subject Mortgage Only

Method 4 focuses only on the new subject mortgage.

Eligible post-closing assets must equal:

125% of the Subject Property Loan Amount

Method 4 also requires:

• Minimum 700 FICO
• Primary residence only
• No non-occupant co-borrowers
• Maximum $3 million loan amount

Simplified Example

The borrower has a new subject mortgage of $1,500,000.

Required post-closing assets:

$1,500,000 × 125% = $1,875,000

When Method 4 May Work Well

Method 4 may be especially useful when the borrower:

• Is purchasing or refinancing a primary residence
• Has significant debt outside the subject mortgage
• Meets the 700 minimum FICO requirement
• Does not need a non-occupant co-borrower
• Has a loan amount of $3 million or less

Method 4 can provide a simpler path because other mortgage and consumer debts are not included in the required-asset formula.

• Number of other properties owned
• Rental-property performance
• Borrower’s FICO score
• Subject-property occupancy
• Total eligible post-closing assets

Broker Tip

Do not assume the method with the simplest name will produce the lowest asset requirement.

Calculate all methods for which the borrower is eligible. A borrower with significant total debt but low monthly payments may perform better under Method 3, while a primary-residence borrower with substantial outside debt may perform better under Method 4.

Eligible assets are counted differently depending on the type of account.

Marketable Securities

Generally counted at:

100% of Eligible Value

Examples may include publicly traded:

• Stocks
• Bonds
• Mutual funds
• Exchange-traded funds
• Other marketable securities

Unvested restricted stock and unexercised stock options are not eligible.

Annuities and Life Insurance

The eligible cash surrender value of an annuity or life insurance policy may generally be counted at:

100% of Cash Value

Applicable penalties and outstanding loans secured by the policy or contract must be deducted.

The face amount of the life insurance policy itself is not an eligible asset.

Recent Sale Proceeds

Documented proceeds from the borrower’s sale of a home or business during the prior four months may be considered.

The file must establish:

• The borrower’s ownership
• The completed sale
• The amount received
• The deposit of the proceeds
• The required asset seasoning

Eligible Cash-Out Proceeds

For Methods 2 and 3, up to 10% of the assets used to satisfy the Asset Qualifier requirement may come from eligible cash-out proceeds.

Technical refinance proceeds representing the borrower’s documented funds being recouped may receive different treatment under the applicable guidelines.