Obtaining a conventional loan for a borrower who is asset-heavy just got easier. Freddie Mac, a government-sponsored agency that oversees the securitization of mortgages, recently changed lending guidelines in numerous ways, making qualifying for this much easier.
The biggest change that was implemented is a more friendly income calculation for borrowers looking to use assets to qualify. Previously, usable assets had to be divided by 240 months to determine the monthly qualifying income from an asset stream. This has now been reduced to 180 months, which automatically increases the qualifying income considerably.
There are also a few other notable changes to the guidelines:
Update #1) Borrowers no longer need to be of retirement age in order to qualify using asset depletion for depository and investment accounts.
Update #2) The Loan-to-Value (LTV) cap of 80% has now been removed entirely.
Update #3) Financing for this type of qualifying is acceptable on investment properties with up to 4 units.
There are some additional requirements on how stable the asset values have been over the past 12 months, which we can determine once the loan is ready to be underwritten.
The changes to asset depletion are undoubtedly helpful for cash-heavy borrowers looking to obtain a conventional loan. This could help borrowers who are right on the edge or who might not have previously qualified. Additionally, it is worth noting that we do offer other asset depletion financing options that have even more relaxed requirements.
Give us a call at (760) 930-0569, and one of our licensed Loan Consultants will be happy to discuss what loan option would make the most sense for you.
