When Income Isn't the Whole Story: How to Use Asset Qualifier Loans to Close More Deals
Learn how brokers can use asset qualifier loans to meet the needs of their clients.
Click to navigate:
- What Is an Asset Qualifier Loan?
- How Asset Qualifier Loans Can Help Brokers Make More Deals
- The Mechanics of Asset Qualification
- Eligible Assets: What Counts Toward Qualification?
- Ideal Borrower Profiles
- Program Parameters and Considerations
- Closing More Deals with Asset Qualifier
Many brokers have encountered wealthy borrowers who still struggle to qualify through traditional income documentation. Newrez SmartEdge Asset Qualifier gives brokers another option for these types of clients.
The program can help create financing opportunities for borrowers whose financial strength is reflected more clearly on their account statements than their tax returns. The product features no employment requirement, no traditional income requirement, and no debt-to-income ratio requirement.
What Is an Asset Qualifier Loan?
An asset qualifier loan is a non-QM mortgage program that uses a borrower's verified assets rather than employment income to support qualification. The program evaluates eligible liquid assets and determines whether those assets can support the proposed housing expense and other debt obligations.
How Asset Qualifier Loans Can Help Brokers Make More Deals
Asset qualifier loans are worth considering if other options—like traditional income-based financing, bank statement loans or DSCR loans—aren't the right fit for a client.
Although a prospective borrower might have the financial resources to buy a home, they may have trouble proving it through a traditional income-based underwriting model. Asset qualifier loans can help brokers give their clients more options.
The Mechanics of Asset Qualification
Understanding how Newrez SmartEdge Asset Qualifier evaluates borrowers can help brokers identify viable opportunities earlier in the process.
SmartEdge Asset Qualifier focuses on the borrower's qualified assets after accounting for the transaction and ongoing debt obligations. The program uses a residual income framework based on post-closing assets.
The Asset Qualification Calculation
The calculation follows this structure:
Step 1:
Total Qualifying Assets
Minus Cash to Close
= Net Post Closing Assets (Min $500K)
Step 2:
Net Post Closing Assets
Minus Debts x 60 Months
= Residual Assets (Must be greater than $0)
Step 3:
Residual Assets
Divided by 60
= Residual Income
The resulting residual income must satisfy minimum requirements based on family size:
- Family size 1: $2,000
- Family size 2: $2,500
- Family size 3: $3,000
- Family size 4: $3,300
- Family size 5: $3,500
- Add $150 for each additional family member up to 7
The program also requires borrowers to maintain at least $500,000 in seasoned assets after closing to cover the new housing payment and all debt obligations.
For brokers, this creates a straightforward screening process. If a borrower has substantial liquidity but limited qualifying income, reviewing assets early can help determine whether SmartEdge Asset Qualifier is a good fit.
Eligible Assets: What Counts Toward Qualification?
Because the program relies on liquid assets, not all assets receive the same treatment. Brokers should factor any likely adjustments into qualification discussions early to avoid overestimating assets.
Tier 1: Highly Liquid Assets (100%)
Assets valued at 100% include:
- Checking accounts
- Savings accounts
- Money market accounts
- Certificates of deposit (CDs)
- Treasury bills
These assets generally provide the strongest contribution to qualification because they are immediately accessible.
Tier 2: Investment Accounts (85%)
The following assets receive an 85% valuation:
- Publicly traded stocks
- Bonds
- Mutual funds
- Investment accounts
Tier 3: Retirement Assets (50%–85%)
Retirement assets receive different treatment based on borrower age:
- Vested retirement accounts for borrowers age 59½ and older: 85%
- Vested retirement accounts for borrowers under age 59½: 50%
Crypto Assets
Certain crypto assets may also be eligible:
- Bitcoin, Ethereum®, and U.S.-listed crypto ETFs: 50%
- U.S. fiat-backed stablecoins: 90%
Eligible crypto assets need to be held with U.S. regulated crypto exchanges, retail FinTech apps, SEC/FINRA-regulated brokerages, or nationally chartered banks under OCC oversight.
Brokers should verify current eligibility and documentation requirements if a borrower is planning to use cryptocurrency to help them qualify.
Important Restrictions
Some assets cannot be used toward qualification, including:
- Business bank statements
- Gifts
- Assets that have seasoned for less than six months
- Assets that can’t be sourced
- Funds that aren't from the borrower’s personal accounts
Ideal Borrower Profiles
Asset qualifier loans might be a good fit when:
- Tax returns don't accurately reflect overall financial strength
- Significant deductions reduce qualifying income
- Cash flow fluctuates from year to year
- A bank statement loan isn’t the right option
If you’re working with one or more of the following types of clients, you might want to consider if they’re a good fit for these loans.
Self-Employed Borrowers and Entrepreneurs
Many business owners legitimately reduce taxable income through deductions, depreciation, and other tax-planning strategies. While those strategies may lower tax liability, they can also make qualifying for a mortgage more difficult.
Recently Retired Borrowers
A borrower may have little or no active employment income while maintaining significant brokerage, retirement, and cash assets. Traditional underwriting may focus on current distributions, while an asset qualifier loan allows brokers to evaluate the borrower's overall liquidity position.
Borrowers Experiencing Liquidity Events
Clients who recently sold a business, received an inheritance or seasoned liquidated assets may have substantial capital but limited ongoing income history.
An asset qualifier loan may provide a way to evaluate overall financial strength while a new income stream is being established.
Borrowers with Complex Income Profiles
Some borrowers earn income from multiple sources, own businesses, manage investment portfolios, or have highly variable cash flow.
When traditional documentation methods become complicated—or the borrower can’t provide enough information to qualify based on income alone—an asset qualifier loan may provide another route to qualification.
Program Parameters and Considerations
Like any non-QM product, SmartEdge Asset Qualifier is designed for specific types of borrowers and includes qualification requirements brokers should understand.
As of publication, program highlights include:
- Purchase and rate/term refinance transactions
- Primary residences and second homes
- Loan amounts up to $2 million
- Up to 80% LTV
- Up to 15 financed properties
- Minimum credit score of 700 for primary residences
- Minimum credit score of 720 for second homes
- Personal assets must be sourced and seasoned for at least six months
- Gifts are not permitted
- Business bank statements are not permitted
Closing More Deals with Asset Qualifier
SmartEdge Asset Qualifier gives brokers another way to serve borrowers whose financial strength isn't fully reflected by traditional income documentation.
Whether you're working with a retiree living off investments, an entrepreneur with substantial write-offs, a client who recently sold a business, or a high-net-worth borrower whose balance sheet tells a stronger story than their tax returns, an asset qualifier loan can provide a qualification path that conventional underwriting may not.
More importantly, it can help brokers identify opportunities that might otherwise be missed. By recognizing clients that might be a good fit for these loans, evaluating alternatives earlier in the process and building referral relationships with professionals who serve high-asset clients, brokers can expand their reach and close more deals.