If you have substantial savings, investments, or retirement assets, our Asset Utilization Program offers another way to establish qualifying income. Asset utilization converts eligible financial assets into a monthly income figure for mortgage qualification. For Arizona borrowers with significant assets and limited documented earnings, this approach can provide an alternative to qualification based primarily on employment income.
How Asset Utilization Works
The program reviews your eligible assets, applies the appropriate qualifying percentages, and subtracts funds allocated to your down payment, closing costs, and required reserves.
The remaining net qualified assets are divided by 60 months to calculate qualifying monthly income:
Net Qualified Assets ÷ 60 = Monthly Qualifying Income
For example, $900,000 in net qualified assets would produce $15,000 in monthly qualifying income under this calculation.
Which Assets Can Be Used?
- 100% of checking, savings, money market, and certificate of deposit balances.
- 100% of the remaining value of publicly traded stocks, bonds, and mutual funds.
- 80% of eligible vested retirement assets.
- Certain trust assets, subject to ownership and access requirements.
- Funds held at verifiable foreign financial institutions, with appropriate translations and currency conversion documentation.
Assets must meet a three-month seasoning requirement. Business assets and proceeds from cash-out refinancing do not count toward the qualifying asset calculation. Funds allocated to your down payment, closing costs, or required reserves cannot also be counted toward asset-based qualifying income.
Minimum Qualified Asset Requirements
When the minimum asset requirement applies, borrowers must have qualified assets equal to the lesser of:
- 110% of the loan balance, or
- $1 million.
Calculate these assets after deducting the down payment, loan costs, and required reserves. For example, on a $600,000 loan, the minimum would be $660,000 in qualified assets after those deductions. Meeting the minimum asset requirement alone does not establish approval; you must also meet the resulting qualifying income and other loan requirements.
Supplement Other Qualifying Income
Asset utilization can also supplement another eligible income source.
When that other income represents more than 50% of total qualifying income, the program’s minimum qualified asset requirement may be waived. Asset documentation and the remaining underwriting requirements still apply. When you combine income methods, the stricter applicable eligibility guidelines and pricing adjustments apply.
Trust and Jointly Held Assets
Certain trust assets may qualify, including:
- Assets held in a revocable trust when the borrower is the trustee.
- Assets held in an irrevocable trust when the borrower is the beneficiary and has immediate access to the assets.
The qualifying percentage depends on the type of assets held in the trust. For jointly held accounts, documentation from the other account holders is required confirming that 100% of the account funds are available for the borrower’s use.
Reserve Requirements
Verified reserves must remain available after closing and be separate from funds used for closing costs.
Loan Amount Minimum Required Reserves Up to $2 million 6 months $2,000,001–$4 million 12 months More than $4 million 24 months
Reserves are calculated using the property’s principal, interest, taxes, insurance, and applicable association dues (PITIA) payment at origination. Eligible reserves may be held at financial institutions outside the United States. Cash-out proceeds may be used for reserves where permitted, even though they cannot be counted as assets used to generate qualifying income.
Can Gift Funds Be Used?
Gift funds are permitted on eligible transactions with combined loan-to-value (CLTV) of 80% or less, provided the borrower contributes at least 20% from their own funds, as required by the program. Gift funds are not permitted when CLTV exceeds 80%. The lender will review the source, documentation, and allocation of all funds.
Who May Benefit From Asset Utilization?
- Retirees with substantial eligible savings or retirement accounts.
- Investors with significant liquid investment portfolios.
- Borrowers between employment positions who have sufficient qualifying assets.
- High-asset borrowers whose documented earnings do not reflect their financial resources.
- Borrowers supplementing other income with eligible assets.
Contact us for more information about asset-depletion or asset-utilization home loans.