🔹 What It Means
Residential asset-based mortgage financing is a type of lending where the loan approval is primarily based on the value of the asset (the property itself) rather than the borrower’s income, credit history, or debt-to-income ratio.
Unlike traditional mortgages (which require W-2s, tax returns, and income verification), asset-based loans are designed for borrowers who:
- May have significant assets but inconsistent income (retirees, business owners, investors).
- Want to leverage the equity in their real estate.
- Do not fit into traditional mortgage underwriting guidelines.
🔹 Key Features
- Collateral Driven – The home (or multiple properties) is the main security for the loan.
- Flexible Qualification – Focuses on assets, equity, or liquid reserves instead of tax returns.
- Higher LTV Ratios Possible – Depending on lender and property type, though usually lower than conventional.
- Private & Non-QM Lenders – Commonly offered through private money lenders, non-QM programs, or portfolio lenders.
- Loan Types – Can be structured as:
- Purchase financing
- Cash-out refinance (using equity)
- Bridge loans
- Faster approvals
- Can unlock trapped equity
🔹 Typical Borrowers
- Real estate investors
- High-net-worth individuals with complex financials
- Self-employed borrowers
- Retirees living off assets rather than income
