Heavy assets & low income mortgage

A couple months back Freddie Mac expanded their guidelines to allow a percentage of a borrower's assets to be used to increase their income in order to qualify for a home loan.  The use of these assets are acceptable for the purchase of a home or a no-cash back refinance.  This can be done if the home is a single family residence and the home must be either the borrower's primary home or second (vacation) home.  This doesn't work for homes that are used for investment purposes.  The maximum loan to value for the mortgage cannot exceed 70% loan to value (LTV).  Meaning you'll either need a 30 % down payment for a purchase or 30% equity for a refinance.

For simplicity sake, let's look at an example with the asset to income calculation. 

Borrowers have provided their bank statements.  Their vested balances, including their 401K & IRAs total $2,000,000.  All assets must be in the borrower(s) names.  The balances used will be after all funds were deducted for down payment, financing costs, pre-paid interest & escrows/impounds.  We take 70% of that total left over balance and divide by 360 months to give us our additional monthly income of $3,888.89.  In our guidelines, it does not matter if the borrower is taking out a 30 year or 15 year, we must divide by 360 months. 

This program is great for retirees with social security, or those that retired early, both with lower streams of current monthly income.  Granted, the extra income that the assets affords you must still be enough to cover all of your monthly payments, plus the proposed house payment and still generate an acceptance through automated underwriting.

If you are a borrower in need of a program that allows for the use of your assets to assist you in qualfiying for a mortgage, please call me to discuss.

Casey Moseman
702-271-1274

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