An Asset Utilization Loan Could be the Answer When DTI Exceeds Requirements

Oct 24, 2023

Our borrower is embarking on their sixth investment property purchase. With a FICO score of 700 and a Loan-to-Value (LTV) ratio of 75%, their financial profile stands as follows: their debt-to-income ratio, based on tax returns, is at 72%, while the loan amount they are seeking is $250,000. Notably, they possess $1.2 million in a retirement account and $50,000 in stocks and bonds. The question arises: Can these assets be leveraged to qualify for the loan?

Non-QM Solution: Indeed, the answer is affirmative! This astute borrower was able to utilize 70% of the funds from their retirement account and 80% of the value represented by their stocks and bonds. With these resources, the borrower’s assets amply cover the new loan amount, the necessary down payment, closing costs, mandatory reserves, and the entirety of their current monthly obligations over a five-year period. Notably, there is no requirement to calculate a debt ratio when opting for this total asset-based calculation. Moreover, there is no need to disclose employment and income details on the mortgage application.

Approved Assets: The ensuing personal holdings qualify as approved assets, suitable for income calculation purposes:

  • The full value of checking, savings, and money market accounts (100%)
  • 80% of the residual worth of stocks and bonds
  • 70% of assets held in retirement accounts

For further information regarding our innovative asset utilization mortgage program, please do not hesitate to contact our office.