People who purchase or refinance homes without employment typically face programs that limit qualifying income to retirement distributions and tax return figures, even if savings are $1M+.

The result? Those who have great savings—enough to purchase using all cash—have very limited mortgage options. Or worse, get denied altogether. So instead, most people forgo a mortgage and use their savings to buy. But that normally means selling investments which are earning a return plus lose liquidity—not always the best option. 

Case and point: purchasing a $500k home via all cash vs 20% down and borrowing $400k could mean losing investment return, generating tax liabilities, and liquidity loss on $400k. Even at a 3% rate of return, that’s $12k/year and no more immediate access to $400k. Not to mention the potential tax burden from selling investments.

All cash purchases aren’t the only options! Lenders exist who allow total savings to qualify and they don’t use historical distributions or tax returns. These programs are known as Asset Based Mortgages. And if you’ve already purchased, you’re still in luck! You can refinance and get your money back with these loans too.

Generally, lenders require savings to cover the purchase price + closing costs + reserves. In other words, they ensure you have enough money to pay off the home + savings left over. You don’t pledge savings or adjust retirement distributions. We just prove you have the money. Makes sense right?