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Asset Depletion Loans in Pacifica
Pacifica's coastal real estate attracts retirees, investors, and high-net-worth individuals who may have substantial assets but limited W-2 income. Asset depletion loans allow these buyers to qualify using retirement accounts, investment portfolios, and savings instead of paystubs.
This loan type serves borrowers transitioning careers, early retirees with portfolio income, or those who've accumulated wealth through investments rather than traditional employment. The beach community lifestyle in Pacifica particularly appeals to this demographic.
Asset depletion programs calculate your qualifying income by dividing liquid assets by the loan term. A borrower with $1 million in accounts could potentially qualify based on approximately $41,666 monthly income over a 240-month period.
Asset depletion loans typically require credit scores of 660 or higher, with better rates available at 700+. Down payments generally start at 20% for primary residences, though some programs accept 10-15% with stronger credit profiles.
Acceptable assets include checking and savings accounts, stocks, bonds, mutual funds, retirement accounts including 401(k)s and IRAs. Lenders typically apply a 70% haircut to retirement accounts to account for taxes and early withdrawal penalties.
You'll need documented proof of asset ownership through recent statements covering 60-90 days. The property must appraise, and title must be clear. Reserve requirements often range from 6-12 months of housing payments beyond the down payment.
Asset depletion loans come from non-QM lenders who offer flexible underwriting beyond traditional agency guidelines. Rates vary by borrower profile and market conditions, typically running 1-3% higher than conventional conforming loans due to portfolio lending risk.
Not all mortgage companies offer these programs. You'll need a lender experienced with asset-based qualification who understands how to structure the file properly. Many traditional banks don't provide this option, making broker relationships valuable.
Documentation requirements vary significantly between lenders. Some accept only liquid taxable accounts, while others include retirement funds with specific discount formulas. Finding the right lender match for your asset composition makes a substantial difference.
Asset depletion works best when you have significant liquid assets but irregular or minimal reported income. Retirees living off investment portfolios, business owners who minimize taxable income, and those between careers benefit most from this approach.
The key is understanding how different lenders calculate qualifying income. Some divide assets by 60 months, others by 240 or 360 months. The calculation method dramatically impacts your purchasing power, so comparing multiple lenders proves essential.
Consider asset depletion if you have $500,000+ in verifiable liquid assets but cannot document traditional income through tax returns. This threshold ensures you have enough assets to generate meaningful qualifying income after down payment and reserves.
Asset depletion differs from bank statement loans, which qualify borrowers based on business deposits rather than accumulated wealth. If you run an active business with strong cash flow but limited assets, bank statement programs may work better.
Foreign national loans serve non-U.S. citizens and may also allow asset-based qualification, but typically require larger down payments. DSCR loans work for investment properties based solely on rental income, not personal assets or income at all.
Asset depletion generally offers the most straightforward path when you have substantial verified assets but complex or minimal income documentation. The program converts your net worth into qualifying income without scrutinizing how you earned the money.
Pacifica's location in San Mateo County means higher property values compared to many California markets. Asset depletion buyers here often need $1 million+ in liquid assets to comfortably qualify for coastal properties while maintaining adequate reserves.
The community attracts Bay Area retirees seeking beach access without San Francisco price tags. Many buyers have tech industry wealth accumulated through stock options and retirement plans, making asset depletion a natural fit for Pacifica's demographic profile.
California's housing market requires careful reserve planning. Lenders want to see that you'll maintain financial stability even after deploying significant assets for purchase. Six months reserves minimum is standard, with 12 months preferred for Pacifica's price range.
A general rule suggests $500,000 minimum in liquid assets for meaningful qualification, though $1 million+ works better for San Mateo County pricing. Lenders divide your assets by the loan term to calculate monthly income.
Yes, retirement accounts qualify but lenders typically discount them by 30% to account for taxes and early withdrawal penalties. A $1 million IRA might count as $700,000 in qualifying assets under this calculation.
Most programs require minimum 660 credit scores, with better rates and terms at 700+. Higher scores may reduce down payment requirements from 20% to 10-15% depending on the lender and asset strength.
Rates vary by borrower profile and market conditions but typically run 1-3% higher than conventional conforming loans. The premium reflects portfolio lending risk and specialized underwriting required for non-QM programs.
No, you don't liquidate assets for qualification. Lenders calculate theoretical income by dividing total assets by months, but your investments remain invested. You only withdraw funds needed for down payment and closing costs.
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.