How Asset Allowance Helped Qualify a $2.65 Million Investment Property
A $2.65 million investment property purchase in San Jose, California, presented a qualification challenge. By applying an Asset Allowance strategy, we were able to use eligible retirement assets to supplement qualifying income and bring the borrower's debt-to-income ratio within the program's qualifying parameters.
The Challenge
The borrower was purchasing a luxury single-family investment property. Although the borrower had substantial retirement assets, the initial debt-to-income ratio was 57%—above the applicable qualifying limit for this scenario.
The Solution
We structured the loan through the an Asset Allowance program. Eligible 401(k) assets were amortized over 36 months, generating an additional $3,000 in qualifying monthly income.
This additional income improved the borrower's debt-to-income ratio without relying solely on conventional income calculations.
The Result
The Asset Allowance strategy reduced the calculated debt-to-income ratio from 57% to 48%, bringing the scenario within the applicable qualifying parameters and helping the borrower move forward with the $2.65 million investment property purchase.