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Novato's housing market attracts retirees, entrepreneurs, and professionals with substantial savings but non-traditional income streams. Asset depletion loans serve this demographic by converting liquid assets into qualifying income.
Marin County's competitive real estate environment requires creative financing solutions. Borrowers with significant portfolios find asset depletion programs offer a path to homeownership that traditional lending overlooks.
Asset Depletion Loans in Novato
Lenders calculate qualifying income by dividing total liquid assets by 360 months (30-year loan term). A borrower with $1 million in verified assets shows $2,778 monthly qualifying income under this formula.
Eligible assets include stocks, bonds, mutual funds, savings accounts, and retirement accounts like IRAs and 401(k)s. Real estate equity and business assets typically don't qualify. Most programs require borrowers to keep these assets in place during the loan term.
Credit requirements remain important. Most lenders expect credit scores above 680, though some programs accept scores as low as 620 with additional assets or larger down payments.
Local decision guide
Use this guide to connect asset depletion loans eligibility, lender expectations, and local market factors before comparing payment options in Novato.
Novato's housing market attracts retirees, entrepreneurs, and professionals with substantial savings but non-traditional income streams. Asset depletion loans serve this demographic by converting liquid assets into qualifying income.
Marin County's competitive real estate environment requires creative financing solutions. Borrowers with significant portfolios find asset depletion programs offer a path to homeownership that traditional lending overlooks.
Lenders calculate qualifying income by dividing total liquid assets by 360 months (30-year loan term). A borrower with $1 million in verified assets shows $2,778 monthly qualifying income under this formula.
Asset depletion loans fall under non-QM lending, meaning fewer institutions offer these programs compared to conventional mortgages. Portfolio lenders and specialized mortgage banks dominate this space with varying program requirements.
Rates vary by borrower profile and market conditions. Expect pricing 1-2% above conventional rates, reflecting the non-traditional underwriting approach. Lenders compensate for perceived risk with higher interest rates and origination fees.
Some lenders require reserve minimums after calculating depletion income. This double requirement protects the lender while ensuring borrowers maintain financial cushion beyond their qualifying calculation.
Documentation remains critical even without income verification. Expect to provide 2-3 months of bank statements and investment account statements showing account balances and asset composition. Lenders verify assets haven't been recently transferred in.
Asset types matter significantly. Highly liquid assets like cash and publicly traded securities get full credit. Restricted stock options or illiquid investments may receive discounted value or complete exclusion from calculations.
Timing your application strategically can improve outcomes. Market volatility affecting portfolio values means some borrowers benefit from applying when account balances peak. Work with experienced brokers who track multiple lenders and understand asset valuation nuances.
Bank statement loans offer an alternative for self-employed borrowers with strong business cash flow but limited personal liquid assets. These programs use 12-24 months of business deposits to calculate income instead of asset depletion formulas.
DSCR loans work better for investment property purchases where rental income covers the mortgage payment. Asset depletion shines for primary residences where borrowers have wealth but irregular income documentation.
Foreign national loans serve non-U.S. citizens, while asset depletion programs require U.S. citizenship or permanent residency. Borrowers who qualify for multiple non-QM options should compare costs, as programs vary significantly in pricing and requirements.
Marin County's higher property values mean borrowers need substantial asset bases to qualify. A $1.5 million Novato home requiring $300,000 down leaves a $1.2 million loan amount, demanding roughly $2.16 million in liquid assets at typical debt-to-income ratios.
Novato attracts professionals commuting to San Francisco and Silicon Valley, many with equity compensation rather than high W-2 income. Stock options and RSUs may qualify as assets once vested and liquid, though lenders apply conservative valuations.
Property insurance costs in Marin County affect qualifying calculations. Lenders include property taxes, homeowners insurance, and HOA fees in debt ratios. Higher insurance premiums in certain Novato neighborhoods can impact how much house your assets support.
Most programs require minimum $500,000 in liquid assets, though successful applications in Marin County typically show $1-3 million depending on purchase price and down payment amount.
Yes, IRAs and 401(k)s qualify as long as they're accessible. Some lenders apply penalties to the calculation since early withdrawal incurs taxes and fees.
Rates vary by borrower profile and market conditions. Expect pricing 1-2 percentage points above conventional rates, with exact terms depending on credit score, down payment, and asset strength.
No, assets remain in your accounts. Lenders use account balances to calculate qualifying income but don't require you to convert investments to cash.
Expect 30-45 days from application to closing. The process mirrors conventional loans with property appraisal, title work, and underwriting, though income verification differs significantly.