Asset-Based Lending: Explore Asset-Based Loans in Real Estate

ABL stands for asset-based lending. An asset-based loan by definition is a type of non-QM loan that’s secured by a borrower’s assets rather than income. Asset-based loans for real estate allow people with significant liquid assets—like savings or investments—to qualify for a mortgage without using traditional income verification. ABLs and asset depletion loans are ideal for retirees, business owners, or anyone with irregular income who still has strong financial reserves.

In order to be eligible for asset-based loan financing, you must have qualifying liquid assets in your name. Qualifying assets include things like:

• Checking and savings accounts
• Certificates of deposit (CDs)
• Investment accounts
• Money market accounts

Ineligible assets for an asset-based mortgage loan include things like:

• Machinery and equipment
• Inventory
• Real estate
• Vehicles
• Art and collectibles

Getting an asset-based home loan can be a good idea if you have substantial liquid assets but don’t qualify for traditional mortgage loans. Asset-based home loans offer flexibility and faster approval, especially for retirees, self-employed individuals, or those with irregular income. However, keep in mind that rates may be slightly higher than conventional loans, and you’ll need to show strong asset reserves. Asset-based loans tend to be best for borrowers with stable finances who want to leverage their assets without selling them.

Asset-based loans can help you save money when buying a house by allowing you to qualify without traditional income documentation, potentially speeding up approval and avoiding costly delays. If you have significant assets but limited taxable income, these loans may enable you to access better financing than you’d get with conventional loans, helping you avoid things like PMI while still securing a competitive rate. Asset-based loan financing can also allow you to buy sooner. With an expedited application and underwriting process, ABLs and asset depletion loans allow you to potentially lock in a lower home price or interest rate before markets shift.

If asset-backed lending doesn’t suit your needs, there are several other financing options to consider. Each of these alternatives can be beneficial depending on your financial situation and the type of property you’re looking to purchase:

• Bank statement loans
• P&L loans
• Conventional loans
• DSCR loans
• Hard money loans

Common costs involved in getting an asset-based loan include:

• Down payment: In order to qualify for an asset-based loan, you must provide a minimum down payment of 20%.
• Mortgage interest: You will lock in your interest rate when applying for your mortgage and pay it over the life of the loan.
• Discount points: You may be able to purchase discount points before closing, which means you can pay money upfront to lower your rate.
• Closing costs: Common closing costs include origination fees, appraisal fees, credit report fees, title insurance, and legal costs.
• Prepayment penalty: Many asset-based loans come with a prepayment penalty, meaning you must pay a fee if you pay off your loan balance too early. Speak with your lender to determine whether they have a prepayment penalty.

Here’s a step-by-step guide to getting an asset-based loan:

1. Apply with a lender: Begin by finding a lender that offers asset-based loans or mortgages and submit an application.
2. Identify your assets: Determine which assets you will use to qualify for the loan. These might include bank accounts, retirement funds, and investment accounts.
3. Submit documentation: Provide the lender with the necessary documentation to verify the value and ownership of your assets.
4. Initial review: The lender will conduct an initial review of your application and assets to determine if you are a good candidate for an asset-based mortgage.
5. Receive preview offer: If the initial review is favorable, the lender will present you with a preview offer outlining potential loan terms. At this point, you can accept or reject the loan terms and rate offered to you.
6. Complete asset review: The lender will then perform a thorough audit of your assets to confirm their value and eligibility.
7. Approval and funding: Once the full review is complete and your assets are verified, you will receive final approval and the funding for your loan.

The cons of asset-based loans include:

• Not all assets qualify: Certain types of non-liquid assets, like inventory or machinery, cannot be used to secure the loan.
• Higher rates than conventional loans: Interest rates are often higher compared to traditional mortgage rates.
• Loan amount is limited to the value of your assets: The maximum loan amount is constrained by the value of your assets, which may not always meet your needs.

The Secured Overnight Financing Rate is an index that calculates a weighted average of the interest rates that major financial institutions charge for overnight loans. When a mortgage is tied to this index, it is possible to get a mortgage rate that will automatically adjust to the 30-day average of the SOFR index. With our 6 month SOFR asset utilization loan, you can take out an asset-based loan with a low-interest rate that’s locked in for a predetermined amount of time. Once that introductory period ends, your interest rate will begin to adjust every 6 months based on the SOFR index, meaning your rate could potentially rise or fall.

Griffin Funding converts your verified liquid assets into qualifying monthly income using a straightforward formula: total eligible assets divided by 60 months (5 years), 84 months (7 years), or 120 months (10 years), depending on the program. Liquid assets such as checking, savings, investment accounts, and CDs count at 100%. Retirement account balances count at 70%. The table below shows how this works for three common borrower scenarios.

Actual qualifying income is determined by your loan officer during underwriting. Factors including credit score, DTI, reserves, and property type all affect final loan eligibility.

An asset-based loan is a type of mortgage that allows you to qualify based on the value of your liquid assets, rather than your income, tax returns, or employment history. The lender converts a portion of your verified assets, such as funds in bank accounts, CDs, or investment portfolios, into “qualifying income” using an asset-depletion formula. You still maintain ownership and control of your assets throughout the process.

By contrast, a pledged asset loan (sometimes called a pledged asset mortgage) requires you to use your assets as collateral. Instead of selling or liquidating those assets, you “pledge” them to the lender as security for the loan. This approach can help you avoid private mortgage insurance (PMI) or reduce your down payment, but your pledged assets may be restricted or frozen until the loan balance reaches a certain threshold.

While both loan types rely on your financial assets, they differ in how those assets are treated:

A Securities-Backed Line of Credit (SBLOC) is also different. An SBLOC is a revolving credit line backed by your investment portfolio. Unlike an asset-based mortgage, SBLOC funds can be used for any purpose (not just home financing), but it carries the risk of a margin call if the market value of your securities drops. In short:

• Asset-based loan: Converts assets into qualifying income for a mortgage.
• Pledged asset loan: Uses assets as collateral for the mortgage.
• SBLOC: Uses securities to secure a line of credit, not a mortgage.

Both bank statement loans and asset-based loans are Non-QM products that eliminate the need for tax returns or W-2s. The right choice depends on whether your financial strength is better demonstrated through your cash flow history or your balance sheet.

Not sure which product fits your situation? Contact a Griffin Funding loan officer for a side-by-side review of both options based on your specific asset mix, income history, and property goals.

Yes. Asset-based loans are specifically designed to help borrowers whose income is variable, seasonal, or difficult to document, including retirees living off investment portfolios, business owners with fluctuating annual distributions, consultants and freelancers with irregular project income, and investors whose income is primarily capital gains or dividends. Because Griffin Funding qualifies borrowers based on verified asset balances rather than income history, income variability does not disqualify you. Your assets serve as the basis for loan approval, regardless of how consistent your income is month to month.

Yes. Griffin Funding can blend asset-derived qualifying income with other verifiable income sources to support your application. For example, a retiree receiving Social Security or pension income can add asset-based qualifying income on top of their fixed income to qualify for a larger loan amount or a lower debt-to-income ratio. Similarly, a part-time or consulting borrower can combine documented income with asset-based income to meet underwriting requirements. Your loan officer will review your full financial picture and determine the most advantageous income combination for your specific situation.

Fannie Mae and Freddie Mac have their own asset depletion guidelines for conventional loans, which allow qualifying income from assets but apply stricter eligibility criteria, including conforming loan limits (capped at approximately $806,500 in most areas for 2026), stricter credit requirements, and specific documentation rules. 

Griffin Funding’s asset-based loan is a Non-QM product, which means it operates outside Fannie Mae and Freddie Mac guidelines. This allows Griffin Funding to offer higher loan amounts up to $3 million, a lower minimum credit score of 620, and more flexible asset documentation, including investment accounts, CDs, and retirement funds. Borrowers who do not qualify under conventional asset depletion guidelines may still qualify under Griffin Funding’s Non-QM asset-based program.

Yes. Griffin Funding finances asset-based loans up to $3 million in-house, which covers properties well above the 2026 conventional conforming loan limit and into true jumbo territory. This makes an asset-based loan a strong option for high-net-worth borrowers purchasing luxury homes, high-value primary residences, vacation properties, or investment properties without needing to show W-2 income or tax returns. Griffin Funding is licensed in 47 states plus DC and works directly with borrowers, with no broker required. If your target property exceeds $3 million, speak with a loan officer about available options.