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Asset Depletion Loans in Colma
Colma's unique housing market serves a distinct demographic, many with substantial assets but non-traditional income. Asset depletion loans let borrowers qualify based on liquid assets like retirement accounts, stocks, and cash reserves rather than W-2 income.
This financing approach works well for retirees, investors living off dividends, or early retirees with significant portfolios. Your assets become the income qualifier, calculated by dividing total liquid holdings over the loan term to establish monthly qualifying income.
San Mateo County's higher property values often align with borrowers who have accumulated wealth through investments rather than traditional employment. Asset depletion programs bridge the gap between substantial net worth and conventional lending requirements.
Lenders typically require $500,000 to $1 million minimum in liquid assets for asset depletion programs. Qualifying assets include cash, stocks, bonds, mutual funds, and retirement accounts. Real estate equity and business holdings generally don't count.
Your qualifying income gets calculated by dividing eligible assets by a set number of months. A common formula divides total assets by 360 months to establish monthly income for qualification purposes.
Credit score requirements range from 620 to 680 depending on the lender and loan amount. Down payments typically start at 20% but may go higher for larger loan amounts or lower credit scores. Rates vary by borrower profile and market conditions.
Asset depletion loans fall under non-QM lending, meaning fewer lenders offer them compared to conventional programs. This specialized financing requires lenders experienced in portfolio-based underwriting and alternative documentation.
Interest rates typically run 0.5% to 2% higher than conventional mortgages due to the non-traditional qualification method. The trade-off provides access to financing that traditional employment-based programs cannot offer.
Working with a mortgage broker gives you access to multiple non-QM lenders simultaneously. Different lenders have varying asset calculation methods, minimum requirements, and rate structures for these programs.
The asset depletion calculation method varies by lender. Some divide by 360 months while others use 240 or 480 months. This creates dramatically different qualifying incomes from identical asset amounts, making lender selection critical.
Timing your loan application around portfolio values matters. Recent market volatility can affect asset valuations and therefore qualifying income. Most lenders use a 60-90 day average or recent statement values.
Consider tax implications before liquidating assets for down payments or closing costs. Many borrowers qualify for the loan but overlook the tax consequences of selling appreciated assets to fund the purchase.
Bank statement loans offer an alternative for self-employed borrowers with business income but limited liquid assets. Asset depletion works better when you have substantial investments but minimal ongoing income flow.
DSCR loans serve real estate investors focusing on rental property cash flow rather than personal income or assets. If buying investment property in Colma, DSCR may offer better rates than asset depletion.
Foreign national loans accommodate international buyers but require larger down payments. If you're a U.S. citizen or permanent resident with assets, asset depletion typically provides more favorable terms and lower rates.
Colma's proximity to San Francisco attracts retirees and early retirement professionals who may have substantial investment portfolios. The city's quieter character appeals to those transitioning from high-income careers to asset-based living.
San Mateo County property values require significant down payments even with asset depletion loans. Borrowers should plan for 20-30% down plus several months of reserves remaining after closing.
Consider how your asset portfolio composition affects loan eligibility. Lenders prefer highly liquid assets like cash and publicly traded securities over restricted stock or limited partnership interests that cannot be quickly converted.
Cash, checking, savings, money market accounts, stocks, bonds, mutual funds, and retirement accounts like 401(k)s and IRAs typically qualify. Real estate equity, business ownership, and restricted securities generally do not count.
Lenders divide your total liquid assets by a set number of months to create monthly income. Common formulas use 360 months, though some lenders use 240 or 480 months, which significantly affects your qualifying income.
Yes, retirement accounts count toward asset depletion calculations without requiring actual withdrawals. The assets establish qualifying income while remaining in your retirement accounts, preserving tax advantages.
Most lenders require 620-680 minimum credit scores for asset depletion loans. Higher scores above 700 typically secure better interest rates and may reduce down payment requirements.
Lenders typically require 6-12 months of mortgage payment reserves after closing. Since you're qualifying based on assets, maintaining substantial post-closing reserves demonstrates continued financial stability.
Mortgage financing for independent contractors and freelancers who earn 1099 income instead of traditional W-2 wages.
Non-QM loans that use 12 to 24 months of bank statements to verify income for self-employed borrowers.
Short-term financing that bridges the gap between buying a new property and selling an existing one.
Debt Service Coverage Ratio loans that qualify investors based on a rental property's income rather than personal income.
Mortgage programs designed for non-US citizens and non-permanent residents who want to purchase property in the United States.
Asset-based short-term loans primarily used by real estate investors for property acquisition and renovation projects.
Mortgages that allow borrowers to pay only the interest for an initial period, resulting in lower monthly payments upfront.
Financing solutions tailored for real estate investors purchasing rental properties, fix-and-flip projects, or investment portfolios.
Home loans for borrowers who have an Individual Taxpayer Identification Number instead of a Social Security number.
Adjustable rate mortgages held in a lender's portfolio rather than sold on the secondary market, offering more flexible terms.
Non-QM mortgages that use a CPA-prepared profit and loss statement to verify income for self-employed borrowers.
Home loans with interest rates that adjust periodically based on market conditions after an initial fixed-rate period.
Specialized mortgage programs designed to support homeownership in underserved communities with flexible qualification criteria.
Mortgages that meet the guidelines and loan limits set by Fannie Mae and Freddie Mac for secondary market purchase.
Financing for building a new home or making major renovations, typically converting to a permanent mortgage upon completion.
Traditional mortgage financing not backed by a government agency, offering flexible terms and competitive rates for qualified borrowers.
Innovative loan products that leverage projected home equity growth to provide favorable financing terms.
Government-insured mortgages from the Federal Housing Administration with low down payments and flexible credit requirements.
A revolving line of credit secured by your home equity that allows you to borrow funds as needed during a draw period.
A fixed-rate second mortgage that provides a lump sum of cash by borrowing against the equity built in your home.
Mortgages that exceed the conforming loan limits set by the FHFA, designed for financing high-value luxury properties.
Loans for homeowners aged 62 and older that convert home equity into cash without requiring monthly mortgage payments.
Government-backed zero down payment mortgages for eligible rural and suburban homebuyers who meet income limits.
Government-guaranteed mortgages for eligible veterans, active-duty service members, and surviving spouses with zero down payment.