Retirement Funds as Income to Qualify for a Home Mortgage Loan
Using Retirement Funds As Income
Retirement Funds As Income to Qualifying for a home mortgage loan can sometimes be a challenge, that’s why we use the funds that are currently in your retirement accounts as mortgage loan income to help you qualify for a home mortgage loan even though you may not be currently receiving distributions from your retirement account.
Conventional Loan Retirements As Income Requirements
- Assets used for the calculation of the monthly income stream must be owned individually by the borrower, or the co-owner of the mortgage loan.
- Assets must be liquid and available to the borrower or co-borrower.
- For 401(k) or IRA, SEP, or Keogh retirement accounts – the borrower must have unrestricted access to the funds and can only use the accounts if a monthly distribution has not already set up.
- If a penalty would apply to a distribution of funds from the retirement account, then the amount of such penalty must be subtracted to determine the income stream from these retirement accounts.
- If the employment-related assets are in the form of stocks, bonds, or mutual funds, then 70% of the value of the retirement accounts will be used to calculate the projected retirement income.
- Non-employment-related assets are ineligible if the retirement account funds are (stock options, non-vested restricted stock, lawsuits, lottery winnings, the sale of real estate, inheritance, and divorce proceeds).
Retirement assets to be used as qualifying income
- Maximum LTV is 70%.
- The minimum Credit Score is 620.
- Purchase and limited cash-out refinance only.
- A principal residence and second home only.
- We also offer Non-traditional mortgages using assets as income to qualify Click here for complete details.
|Example of the Calculation of Net Retirement Funds as Income|
|IRA (made up of stocks and mutual funds)||$ 500,000|
|Minus 10% of $500,000 ($500,000 x .10)
(assumes the borrower is not yet 59 1/2 years of age at the time this income is being calculated; therefore, it is subject to a 10% penalty for early distribution. This penalty must be levied against any cash being withdrawn for closing the transaction as well as the remaining funds used to calculate the income stream.)
|Total eligible documented assets||(=) $ 450,000|
|Minus funds required for closing
(down payment, closing costs, reserves)
|(a) Subtotal||(=) $ 350,000|
|Minus 30% of $350,000 ($350,000 x .30)
(assumes funds are in the form of stocks, bonds, and mutual funds)
|(b) Net Documented Assets||(=) $245,000|
|Monthly income calculation
($245,000/360 (or applicable term of the loan in months))
See Income Calculation/Payout Stream in the table below.
Asset Depletion Loans – Asset Based Mortgage Programs
We also offer a Non-traditional mortgage using assets as income to qualify, the borrower’s earnings are calculated (the amount of money they make through their employment). By contrast, an asset qualifier mortgage allows the borrower to use money in the form of verified assets to qualify. Verified assets can include the following:
- 100% of Checking & Savings accounts.
- 80% of Investments such as Stocks, bonds, or mutual funds.
- 100% of Money market accounts.
- 80% of Marketable securities.
- 80% of Retirement accounts, like IRAs and 401ks, must have cash conversion liquidity
- Business assets are ineligible.
- Click here for complete details.
Comparing Current Asset Depletion Rates
Finding the lowest Asset Depletion mortgage loan rates is very important, that’s why we’ve already searched them for you, getting the lowest loan rate possible could save you hundreds of dollars a year and thousands of dollars over the life of your loan. Yes, having us find you the best loan rates is a big deal.
Current Asset Depletion Mortgage Rates
Eddie Hoskins Founder & CEO
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