Asset-based financing
For asset-rich borrowers whose wealth is better represented by holdings than by ongoing employment income.
What it is
Asset-based (or asset-depletion) approaches translate eligible assets into an illustrative income stream for qualification purposes. They exist for borrowers — often retirees or investors — who have substantial assets but limited traditional employment income.
How it's generally evaluated
A lender considers eligible, accessible assets, excludes certain holdings, and spreads a portion over an assumed period to derive an illustrative monthly figure. Which assets count, how they're discounted, and the utilization period all vary by program.
When it may fit
Retirees, high-net-worth borrowers, and asset-rich applicants with strong balance sheets but modest reported income. It's frequently one of several methods worth comparing.
Questions to ask a professional
- Which of my assets are eligible, and how are they discounted?
- What utilization period do you use to convert assets into income?
- How do reserves interact with the assets used to qualify?
What it does not mean
Any asset-to-income figure is an illustration, not an underwriting calculation or an approval. Program rules govern the outcome. A dedicated asset-depletion estimator is planned.