If you have significant assets but unpredictable or low documented income, a stated asset program can help you obtain a mortgage or loan. This type of loan focuses on verifying your liquid assets instead of relying solely on W-2 income or tax returns. Typical borrowers who benefit include the self-employed, retirees, investors with fluctuating income, and foreign nationals lacking traditional U.S. income records.
Historical Context: Moving Beyond “Liar Loans”
Before the 2008 financial crisis, some lenders offered “stated income, stated asset” loans that required little verification. These “liar loans” contributed to the housing market collapse. Today, stated asset programs require full documentation and verification to comply with regulations like the Ability-to-Repay rule from the Dodd-Frank Act and are classified as Non-Qualified Mortgages (Non-QM). Learn more about Non-QM Mortgages.
How Do Modern Stated Asset Programs Work?
- Asset Documentation: Borrowers provide statements from bank accounts, brokerage accounts, vested retirement plans (such as 401(k)s or IRAs), and other liquid assets.
- Applying a Haircut: Lenders reduce the asset values to account for potential market volatility — for example, counting 70% of stocks instead of 100%.
- Calculating Qualifying Income: The adjusted asset base is divided by the loan term months (like 360 months for a 30-year mortgage) to create an income figure for qualification.
For instance, with $2 million in brokerage accounts and a 70% haircut, the qualifying asset value is $1.4 million. Dividing by 360 months yields about $3,888 monthly income for loan approval.
Who Should Consider Stated Asset Loans?
These programs suit borrowers with strong net worth but atypical income documentation, including:
- Self-Employed and Business Owners: Their tax returns may reflect low income due to deductions, but they have substantial cash reserves. Related resources: Self-Employed Income Verification.
- Retirees: Living off retirement savings without taxable income.
- Investors with Irregular Income: Real estate flippers or venture investors with uneven cash flow.
- Foreign Nationals: Who possess significant assets but lack U.S. credit history or W-2 income.
Eligible Assets
Lenders typically accept:
- Checking and savings accounts
- Brokerage accounts (stocks, bonds, mutual funds)
- Vested retirement accounts (401(k), IRA, with conditions)
Illiquid assets like home equity, art, or automobiles are usually excluded.
Pros and Cons
| Pros | Cons |
|---|---|
| Provides loan access for those with non-traditional income | Higher interest rates than conventional loans |
| Focuses on overall financial strength | Often requires larger down payments (20-30%) |
| Allows financing without liquidating assets | Limited lender availability |
| Can speed qualification if documentation is robust | More complex asset verification process |
Addressing Common Myths
Unlike early SISA loans, today’s stated asset loans require full verification. Assets must be seasoned (typically 60-90 days) and legitimate, and lenders thoroughly review documentation.
These loans are not subprime but serve prime borrowers with unique financial profiles.
Frequently Asked Questions
Are stated asset loans legal? Yes. They comply with current regulations under Non-QM loan guidelines.
Do interest rates cost more? Generally yes, due to higher perceived risk.
Can retirement accounts be included? Some lenders accept vested 401(k)s or IRAs, often applying steeper haircuts without requiring liquidation.
For detailed guidelines on self-employed income and asset verification, visit our articles on Self-Employed Income Verification and Verification of Assets (VOA).
For authoritative information on mortgage regulations, see the Consumer Financial Protection Bureau’s Ability-to-Repay and Qualified Mortgage Rule.
Sources:
- Consumer Financial Protection Bureau: Ability-to-Repay Rule
- Forbes Advisor: Asset-Qualifier Mortgages
- Investopedia: Stated Income, Stated Asset Loans
