Asset-Based Loans for California Homebuyers and Homeowners

An asset-based loan, also known as an asset utilization loan, allows you to qualify for a mortgage based on your liquid assets. This means your investments, savings accounts, or other monetary holdings at a financial company. This option is ideal for California homebuyers or homeowners who may not have a traditional income source but have accumulated a lot of assets. With asset-based lending, your wealth helps you access the home financing you need.

investment account calculations

Key Features of Asset-Based Loans

Asset-based loans offer a range of features tailored for California's competitive housing market:

Who Should Consider an Asset-Based Loan?

How Asset-Based Loans Work in California

Here’s a simple breakdown of the process:
Step 1: The Underwriter & loan originator reviews your liquid asset accounts.
Step 2: We calculate your maximum borrowing potential based on asset account values (not your personal income), age and personal debts.
Step 3: You receive an offer based on the calculated value of your qualifying liquid assets

Asset-Based Loan Qualification Criteria

To help you understand whether you qualify, here are the basic requirements and factors considered in asset-based home lending:

Liquid Assets & Credit

  • – Checking, savings, CD or money market
  • – Stocks, bonds, ETFs, or Mutual Funds
  • – IRA's, 401(k), HSA
  • – Credit scores above 680

Eligible Property & Usage

  • – Detached home, condo, townhome or duplex
  • – Primary home or vacation home

Loan amount

  • – Varies up to $3 million
  • – Up to 90 LTV on $2 million
  • – Up to 80 LTV on $3 million

Your application may be declined if you have:

  • – Recent deposits difficult to source
  • - Funds not in the account for 90 days

 

Notes:

  1. If you are not 59 1/2 years old, your retirement account balances may be reduced by 30%.
  2. Your mortgage or rent payment history in the last 2 years should not show any 30-day late payments.

High net worth borrowers are attracted to Southern California

In San Diego, neighborhoods like Del Mar and Coronado draw those seeking luxury single-family homes or oceanfront condos. Del Mar offers a relaxed coastal vibe, beautiful beaches, and stunning views with home prices typically starting at $2 million.

Coronado, known for its historic charm and easy access to the beach, offers single-family homes and condos priced from $1.5 million and higher. North of San Diego, Rancho Santa Fe is another sought-after area where large estates and sprawling single-family homes start at around $3 million. These areas tend to attract high-net-worth buyers seeking a blend of luxury and tranquility.

Here’s an example below of how a high-net-worth buyer could use liquid assets to qualify for a loan on a luxury property in Southern California such as a $2.5 million single-family home in Del Mar.

Purchase Price: $2.5 million
Down Payment: $500,000 (20% of the purchase price)
Loan Amount: $2 million

Qualifying with Liquid Assets
Asset Requirements: Lenders often require either:

Monthly Housing Expenses (Estimate):
Principal and Interest Payment (at an estimated 6% interest rate on a 30-year loan): ~$11,991 per month
Property Taxes and Insurance: ~$2,552 per month
Total Monthly Housing Expense: ~$14,543

The buyer would need to provide evidence of at least $873,000 in liquid assets. In addition, enough to cover the down payment ($500,000), reserves (9-12 months) $130,887, and closing costs (estimated at $36,000).
Total Liquid Assets Required: $130,000 (reserves) + $500,000 (down payment) + $36,000 (closing costs) = $1.54 million.
In this scenario, the buyer would qualify by demonstrating they have sufficient liquid assets to cover the required down payment, closing costs, and reserves to cover future payments. Asset-based qualification can be a powerful option especially for high-net-worth individuals with significant investments but irregular income.


Disclosure: Minimum loan amount is $200,000 for residential loans. Loan programs are subject to change per lender at any time until the loan is approved and the rate is locked. Borrowers must be approved by underwriting. Not all applicants will qualify.