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Buy a Florida Home Without Selling Stocks: An Asset Guide

Q: What is an asset-based or asset depletion mortgage?

A lender's seasoning period is a mandatory waiting time after you purchase or refinance a property before you can access the full after-repair value (ARV) for a cash-out refinance. Most DSCR lenders require a seasoning period of 6 to 12 months. Refinancing before the seasoning period concludes typically means the lender will base the loan amount on your original purchase price plus rehab costs, which severely limits the amount of equity you can cash out. Waiting until after the period allows you to borrow against the full market value you created through your renovations.

Q: How do lenders calculate my qualifying income from assets?

To justify a higher appraised value, you should provide the appraiser with a detailed and organized renovation packet. This packet removes guesswork and provides concrete evidence of the work performed. It should include: a cover letter summarizing the major upgrades, a detailed scope of work document itemizing all improvements, compelling before-and-after photos showing the property's transformation, copies of paid invoices and receipts for materials and labor, and copies of any official building permits that were issued for the work.

Q: What types of assets are usually eligible for this kind of financing?

No, LTV limits for cash-out refinances vary significantly among different DSCR lenders, as each has its own guidelines and risk tolerance. While purchase loans may reach 80% LTV, cash-out refinances are often capped at 70% or 75% LTV. The specific LTV offered to an investor is influenced by several factors, including: Credit Score (higher scores typically qualify for higher LTVs), DSCR Ratio (a stronger income-to-debt ratio may result in a better LTV offer), Property Type (a single-family home might receive a higher LTV than a multi-unit property), and Loan Amount (some lenders may offer different terms based on the size of the loan).

Q: How does an asset-based loan help me avoid capital gains taxes?

Your property's monthly rental income is the foundation of a DSCR loan approval. The formula is: DSCR = Gross Rental Income / Total Monthly Housing Payment. A higher rent results in a higher DSCR. This proves to the lender that the property can comfortably support a larger loan payment, which in turn allows you to qualify for a larger loan amount and maximize your cash-out.

Q: What is the difference between asset depletion and a pledged asset loan?

Yes, it is often possible to pay for closing costs with the proceeds from your new loan, meaning you don't need to bring cash to closing. However, these costs are not added on top of your loan limit. Instead, the closing costs are subtracted from the total cash-out funds available to you after your existing mortgage is paid off. The total loan amount, including these costs, cannot exceed the lender's maximum LTV limit based on the property's appraised value.

Q: Can I use the same assets for both my down payment and income qualification?

Investors can make several avoidable errors that reduce their available cash-out funds. The most common mistakes include: Poor Documentation (failing to provide an appraiser with a thorough renovation packet can lead to a conservative and lower valuation), Refinancing Too Soon (not waiting for the lender's seasoning period to expire is a costly mistake that forces the loan to be based on cost rather than value), Lacking a Tenant (attempting to refinance a vacant property is less favorable, as lenders prefer the security of a signed lease over estimated market rents), and Ignoring Lender Differences (accepting the first loan offer without comparing options can mean missing out on better LTV limits or shorter seasoning requirements from other lenders).

Q: What are the typical qualification requirements for an asset-based mortgage?

The ideal time to begin the refinance process is 30 to 45 days before your lender's seasoning period expires. This allows you to gather all necessary documentation, secure an appraisal, and complete underwriting so that you can close immediately once the seasoning requirement is met. Crucially, by this time, the property should also be 'stabilized,' which means you have a qualified tenant in place with a signed lease and have collected at least the first month's rent.

Specialized In Jumbo Loans, Investor Loans, DSCR Loans, Non-QM Financing, Commercial Mortgages, and Tax-Informed Lending Strategies

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TL;DR

An asset-based mortgage is a powerful tool for high-net-worth individuals and investors looking to purchase real estate without disrupting their financial strategy. Key advantages include:

Leverage Your Portfolio: Use the value of your existing investment portfolio to qualify for a home loan, eliminating the need to sell off valuable assets.
Avoid Capital Gains Taxes: By not liquidating stocks, bonds, or other appreciated assets, you can avoid triggering substantial tax events on your profits.
Secure Jumbo Financing: This approach is particularly effective for securing large loans in competitive markets like Naples and Palm Beach, Florida, through strategies like asset depletion or pledged asset loans.

What is an asset depletion or asset-based mortgage loan?

An asset-based mortgage, often called an asset depletion loan, is a specialized financing tool that allows you to qualify for a home loan based on the value of your assets rather than traditional documented income like pay stubs or tax returns. Instead of verifying a W-2 salary, a lender calculates a 'hypothetical' monthly income from your investment portfolio. This strategy is a game-changer for high-net-worth individuals, retirees, or investors whose wealth is concentrated in assets, not necessarily in high monthly cash flow.

For luxury buyers eyeing property in places like Palm Beach or Naples, this approach solves a major problem. You can secure the financing you need for a jumbo mortgage without being forced to sell off high-performing stocks or bonds, which would trigger a substantial and often unnecessary tax event. It is a strategic way to make your wealth work for you in real estate without dismantling your long-term investment strategy.

How do lenders calculate 'income' from my investment portfolio?

Lenders use a straightforward formula to convert the total value of your eligible assets into a qualifying monthly income stream. While the exact calculation can vary between lenders, a common industry standard is the 'asset depletion' method. (The data, information, or policy mentioned here may vary over time.)

Here’s a typical breakdown:

Determine Net Asset Value: The lender verifies the total current value of your eligible, liquid assets.
Apply a Divisor: This total value is then divided by a set number of months, often 360 (representing a 30-year loan term). Some loan programs may use a shorter term, like 240 or even 60 months, which would result in a higher calculated monthly income. (The data, information, or policy mentioned here may vary over time.)
Calculate Qualifying Income: The result of this division is treated as your monthly income for mortgage qualification purposes.

Example: Let’s say you are looking to purchase a waterfront home in Miami and have a verified investment portfolio valued at $4,000,000.

Asset Value: $4,000,000
Lender's Divisor: 360 months
Calculation: $4,000,000 / 360 = $11,111

Calculating mortgage income from an investment portfolio

In this scenario, the lender would add $11,111 to your monthly income for calculating your debt-to-income (DTI) ratio, even if you don't draw a single dollar from the portfolio. For retirees or those with variable income, this can be the key to qualifying for a substantial loan.

Can I use this strategy for both a down payment and qualification?

Yes, but it is critical to understand that this is typically achieved through two different, though related, types of asset-based strategies. You generally cannot use the same pool of assets for both income depletion and the down payment simultaneously.

For Income Qualification: You use the asset depletion method described above. The assets remain in your account, untouched. The lender simply uses their value on paper to calculate an income figure to help you meet DTI requirements.
For a Down Payment: You would use a pledged asset loan or a securities-based line of credit (SBLOC). In this case, your assets serve as collateral for a separate loan that provides the cash for your down payment. This allows you to avoid selling assets while still accessing liquidity.

Some sophisticated loan programs may allow for a combination, but it is essential to clarify the specifics with your mortgage advisor. A common approach is to use one portion of your portfolio for a pledged asset loan to cover the down payment and another portion for the asset depletion calculation to qualify for the mortgage itself. (The data, information, or policy mentioned here may vary over time.)

What types of assets are eligible for this type of financing?

Lenders prefer stable, liquid assets that can be easily valued and, if necessary, liquidated. While the exact list varies, the most commonly accepted assets include: (The data, information, or policy mentioned here may vary over time.)

Stocks, bonds, and mutual funds held in brokerage accounts.
Vested funds from retirement accounts like 401(k)s and IRAs. Lenders often have specific rules here, such as requiring the borrower to be of retirement age (typically 59.5 years or older) to use 100% of the funds without penalty. For younger borrowers, they may only count a percentage (e.g., 60-70%) of the vested balance. (The data, information, or policy mentioned here may vary over time.)
Cash-equivalent assets such as checking accounts, savings accounts, and money market funds.
Annuities that have a clear cash surrender value.

Assets that are typically ineligible include non-liquid assets, hard-to-value items, or those with high volatility. This list often includes real estate holdings, private company stock, stock options, and cryptocurrencies. (The data, information, or policy mentioned here may vary over time.)

Are the interest rates on these loans competitive with traditional jumbo loans?

Yes, asset-based mortgages can be competitive with traditional jumbo loans, especially in a thriving market like Florida. Because these loans are typically offered to borrowers with high credit scores and substantial liquid assets, the perceived risk to the lender is often lower than with other non-traditional loan types. As a result, the interest rates are generally comparable to what you would find for a standard jumbo mortgage that relies on W-2 income. (The data, information, or policy mentioned here may vary over time.)

While the rate might be fractionally higher in some cases, it is crucial to look at the total financial picture. The primary benefit of an asset-based loan is the potential tax savings from not liquidating appreciated assets. Any minor difference in the interest rate is often insignificant compared to a potential six-figure capital gains tax bill.

How does this strategy help me avoid capital gains taxes?

This is the most powerful wealth-preservation feature of an asset-based mortgage. When you sell an asset that has increased in value, such as stocks you bought years ago, the profit is subject to capital gains tax. For long-term gains, this tax can be as high as 20% at the federal level, plus any applicable state taxes and the Net Investment Income Tax. (The data, information, or policy mentioned here may vary over time.)

By using your assets as a basis for qualification (depletion) or as collateral (pledge), you never sell them. The assets remain in your portfolio, continuing to grow and generate returns. You are not creating a 'taxable event'.

Luxury waterfront home in Florida, representing a purchase made with an asset-based mortgage

Example: You need $800,000 for a down payment on a luxury condo in Naples. Your stock portfolio contains shares you bought for $200,000 that are now worth $800,000, representing a $600,000 long-term capital gain.

Option 1: Sell Stocks: You sell the shares to get the cash. You may owe capital gains tax on the $600,000 profit. At a 20% federal rate, that's a $120,000 tax bill, not including other potential taxes.
Option 2: Asset-Based Strategy: You use a pledged asset loan. You borrow against your portfolio to get the $800,000. Your stocks are not sold. Your tax bill related to this transaction is $0. Your portfolio continues to appreciate, potentially offsetting the interest cost of the loan.

What is the difference between pledging assets and depleting them on paper?

Though both are asset-based strategies, they function very differently and serve distinct purposes in the mortgage process. Understanding this distinction is key to structuring your financing effectively.

Pledged Asset Mortgages

A pledged asset mortgage involves using your investment portfolio as collateral to secure the loan, often allowing for a higher loan-to-value (LTV) ratio and potentially reducing or eliminating the need for a cash down payment. The assets are held in a separate account, typically managed by the lender or an affiliate. You still own the assets and receive dividends and capital appreciation, but you cannot sell them until the pledge is released. This is a direct lien against your securities, similar to how a house is collateral for a mortgage.

Asset Depletion Mortgages

Asset depletion is purely a calculation method. It is a way for the lender to qualify you based on your wealth, not a loan against your assets. Your portfolio is not held as collateral, there is no lien placed on it, and you retain full control to manage or sell your investments as you see fit. The lender simply verifies the existence and value of the assets to underwrite your ability to repay the loan. This method is used to solve an income problem, not a down payment problem.

What are the qualification requirements for Florida asset-based loans?

Qualification standards for asset-based loans are designed for financially stable borrowers with significant liquidity. While requirements vary by lender, here are the typical benchmarks for securing this type of financing for a property in Palm Beach, Miami, or other high-value Florida locations: (The data, information, or policy mentioned here may vary over time.)

Excellent Credit: A FICO score of 700 or higher is generally the minimum, with the best terms reserved for borrowers with scores of 740+.
Significant Liquid Assets: Lenders will need to see substantial, verifiable assets in eligible accounts. The total amount must be sufficient to meet the lender's depletion calculation or collateral requirements.
Post-Closing Reserves: You will likely need to show significant funds remaining after the down payment and closing costs. This can range from 6 to 24 months of total monthly housing payments (PITI).
Clean Financial History: A history of stable finances, with no recent bankruptcies, foreclosures, or major delinquencies, is crucial.
Property Type: These loans are typically used for primary residences or second homes, though some lenders may offer them for investment properties under different terms. If you have a strong investment portfolio and are exploring Florida real estate, an asset-based loan might be your most tax-efficient strategy. Discuss your financial picture with a mortgage strategist to see how your assets can work for you without disrupting your wealth-building goals.

Ready to leverage your portfolio for your next luxury home without liquidating your investments? See what you qualify for and Apply for a Mortgage to start your confidential consultation.

Author Bio

David Ghazaryan is the expert mortgage strategist and founder behind iQRATE Mortgages. With a mission to fund home loans that traditional banks won't touch, David specializes in helping clients with unique financial situations, including those recovering from foreclosure or bankruptcy. He expertly crafts smart, strategic, and stress-free mortgages by leveraging a vast network of over 100 lenders to secure competitive rates for investors and homebuyers alike. Praised for exceptional customer service, David has helped hundreds of families with a 97% satisfaction rate, guiding them to the mortgage they deserve.