Your client can buy the home without selling the position that bought it, and without pledging it. This one page explains how, and who it is wrong for.
Who it is for: Financial advisors, brokers and managers with clients who are rich in assets and light on income.
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A client with a strong portfolio often thinks there are two choices: sell and realize the gain, or pass on the house. An asset-based loan reads the client’s verified assets and turns them into qualifying income, without tax returns and without a debt-to-income calculation.
It is not a securities-backed line. Nothing is pledged and no lien is placed on the account, so the portfolio stays invested under your management. It is not right for everyone, and a conventional loan may be simpler when income documents cleanly.
The honest part. Not investment or tax advice. How the money is positioned stays your call.
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A short summary of The Asset-Based Loan, Decoded for Advisors. The guide itself is written to keep beside a client conversation, and it is general information on a lending mechanism, not investment or tax advice.
A client with a strong portfolio often believes those are the only choices: sell the winners and realize the gain, or give up on the home. An asset-based loan is a third route. The assets do the work of showing the client can repay, and the portfolio is neither sold nor pledged. It stays invested, under your management, as it was.
The lender reads the client’s statements and counts the liquid balances plus a share of investment and retirement accounts. In one method, what is left after the down payment, closing costs and reserves is spread over a set number of months and treated as monthly income, alone or added to a pension or wages, and the client’s debts are measured against it. In another method there is no income figure and no debt-to-income ratio at all: the test is whether the assets left after closing are enough.
This is the point most pitches blur. With a pledged-asset or securities-backed line, the account secures the debt. Here nothing is pledged and no lien is placed on the account, so there is no maintenance requirement and no margin call if markets fall. The home is the collateral, as with any mortgage, and the accounts stay fully invested and fully the client’s.
The lender works from complete statements, every page, for each account the client wants counted, and asks about large or unusual deposits. Money that has only just arrived, for example after a large transfer, may need time in the account before it can be used, so it helps to have the accounts settled before the home search begins. Retirement accounts also need the plan’s withdrawal terms.
It tends to suit retirees with a small fixed income and significant savings, founders and business sellers between liquidity events, self-employed clients whose returns understate their real position, and clients holding a low-basis position they do not want to sell. It is not right for everyone: when income documents cleanly, a conventional loan may be simpler. Which box a client sits in is a conversation, not a checklist.
No tax returns are needed to show income, and some methods need no employment and no debt-to-income calculation. Credit, the record of housing payments, the appraisal and the property are underwritten as usual. Most programs are for the home the client lives in; some also allow a second home or a rental property. Balances are confirmed again shortly before closing, and there is no requirement to withdraw the money.
An example, in words. Picture a recently retired client living on a modest pension, with most of the household’s wealth in a brokerage account built around a long-held position. Selling enough to buy would realize a sizeable gain. Instead, the lender reads the statements, counts the eligible accounts, sets aside what the purchase needs, and turns the rest into a monthly figure added to the pension. The shares never move, the gain is not realized, and the home still gets bought. An illustration only: not a quote, a loan decision, or investment or tax advice.
No. Nothing is sold and nothing is pledged. The lender reads the statements, the home is the collateral, and the portfolio stays invested under your management.
A securities-backed line uses the account as security, which can bring maintenance requirements and margin calls if markets fall. An asset-based mortgage places no lien on the account. It is an ordinary home loan, secured by the home, in which verified assets show the client can repay.
Not necessarily. Tax returns are not needed to show income. With some methods, no employment needs to be shown; with asset depletion, the assets can be the client’s only income or be added to a pension, wages or other income the client documents.
Bank, brokerage and retirement accounts are the usual ones. Each program counts each kind of account in its own way, and some count only part of an account’s value. Retirement accounts need the plan’s withdrawal terms.
Before the home search, if possible. Money that has just arrived may need time in the account before it can be used, so having the accounts in place early avoids surprises. A loan officer can then say which method fits the client’s accounts and the home.
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This page is general information, not a commitment to lend. Programs, terms and eligibility depend on credit, income, property and underwriting review and are subject to change without notice. The guide is general information on a lending mechanism, not investment, tax or individualized financial advice.
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