Most borrowers are ready to share tax returns, pay stubs, W-2s, and other proof of income when applying for a mortgage. But what happens if you don’t have a traditional income stream but still have significant assets and strong financial stability? That’s where asset-based lending comes in. At Homespring Mortgage, we understand that financial strength doesn’t always look the same for every borrower. Whether you’re retired, self-employed, or structured your income creatively, asset-based loans offer a smart, flexible path to home financing.
In this blog, we’ll explain how asset-based lending works, who it’s designed for, and what to expect throughout the mortgage process.
What Is Asset-Based Lending?
Asset-based lending is a mortgage solution that allows borrowers to qualify based on their assets rather than their income. Instead of reviewing their job history or verifying a steady paycheck, lenders calculate their ability to repay the loan by looking at their liquid or semi-liquid assets, such as savings accounts, investment portfolios, and retirement funds. Simply put, lenders use your existing assets to create a qualifying “income stream” by dividing those assets over a certain number of months, often 60 or 120. This figure becomes your qualifying income, even if you don’t receive a regular paycheck.
The best part is that you don’t have to cash in or sell those assets to qualify. They stay right where they are but are factored into your ability to repay the loan.
Who Is It For?
Asset-based mortgages are designed for borrowers with substantial financial reserves but non-traditional income structures. This often includes people like:
- Retirees living off of savings or investments
- High-net-worth individuals without a steady salary
- Self-employed professionals with fluctuating income
- Entrepreneurs who reinvest most of their earnings back into their businesses
- Trust fund recipients or beneficiaries of large inheritances
- Individuals between jobs or in career transitions who still have strong asset portfolios
If you’ve ever been told you “don’t qualify” because your income isn’t easy to document—even though your financial situation is solid—this kind of mortgage could be a game-changer.
How It Works
The process for an asset-based mortgage is different from a conventional loan. Rather than focus on employment or tax returns, lenders look closely at your assets. This may include checking, savings, investment accounts, retirement accounts, and other liquid or near-liquid funds. Each type of asset may be calculated differently. For example, retirement accounts might be discounted to account for taxes or early withdrawal penalties.
Lenders typically divide eligible assets over a set term—commonly 10 years (120 months)—to calculate a monthly figure that can be used to qualify for the mortgage. The assets used to qualify must be verifiable, seasoned (not newly deposited), and accessible. You can’t use real estate equity or assets tied up in illiquid investments like privately held companies unless you plan to liquidate them before closing.
Key Benefits of Asset-Based Loans
There are several reasons borrowers choose asset-based lending over more traditional financing, including:
- No employment or income verification required: Ideal for retirees, entrepreneurs, and independent contractors.
- Keep your investments intact: You don’t need to sell stocks or cash out retirement accounts to qualify.
- Flexible underwriting: Lenders take a broader view of financial strength, not just monthly income.
- Ideal for second homes or investment properties: Many asset-based programs are available for various property types, not just primary residences.
Asset-based lending provides equal opportunities to anyone who has the means to repay a loan but doesn’t fit into the traditional W-2 mold.
Important Considerations
While asset-based loans offer greater flexibility, there are a few things to keep in mind, such as:
- Higher down payment requirements: Depending on the lender, you may be required to put down 20% or more.
- Slightly higher interest rates: Because this is a specialized loan product, the interest rate may be slightly higher than that of conventional loans.
- Stricter asset verification: Lenders must verify and document their assets fully, so be prepared to provide clear statements and account access if needed.
- Limited lender availability: Not all mortgage companies offer asset-based lending, so you’ll want to work with a lender with experience with this type of loan.
Why Choose Homespring Mortgage?
At Homespring Mortgage, we offer options beyond one-size-fits-all mortgage options. We know that financial strength comes in many forms, and we’re here to match you with a loan that reflects your real-world situation—not just what’s on a tax return.
Our team will do the following:
- Evaluate your complete financial picture to determine if an asset-based loan is right for you
- Walk you through which assets count toward qualification and how they’ll be calculated
- Guide you through the paperwork, underwriting, and approval process with clarity and transparency
- Provide recommendations tailored to your long-term financial goals
Whether buying your dream home, refinancing an existing mortgage, or exploring a second property, we’re here to help you finance it on your terms.
Explore Your Charleston Mortgage Options with Homespring Mortgage
Asset-based lending might be an excellent fit if you have significant assets but don’t receive traditional W-2 income. Alternatively, if you’re looking for a smarter, more flexible way to qualify—an asset-based loan may be the answer. It’s all about finding the right strategy for your situation, and that’s what we do best at Homespring Mortgage. If you’re interested in learning more, let’s talk about your goals and assets and how we can help you leverage them to secure the financing you need.
Contact Homespring Mortgage today to schedule a consultation and learn more about asset-based lending—and how it might be the key to helping you make your next move.