Mortgage professionals looking for new ways to qualify borrowers with substantial assets but non-traditional income got a closer look at asset utilization lending during NMP's latest Deal Desk webinar, sponsored by Kind Lending.
During the June 17 session, Qualify More Borrowers with Kind's Non-QM Asset Depletion Advantage, Kind Lending executives Mark Melini, SVP of Non-QM Production – TPO, and Quinton Crow, VP of Production, addressed real-world questions and borrower scenarios demonstrating how asset utilization can be used to qualify borrowers outside traditional agency guidelines.
The discussion focused on one of the faster-growing segments of the Non-QM market: helping borrowers qualify using liquid assets rather than traditional employment income.
"Non-QM is encompassing about 10 to 12% of the entire market share out there, and asset utilization is a big part of that," Melini said during the webinar. "The growth now is tremendous."
Melini also noted that Kind's non-QM production has continued to outperform expectations this year.
"We're way ahead of our forecast from a national level and issuance level. We're way ahead of our forecast for 2026 thus far after May closed down," he said.
Converting Assets Into Qualifying Income
Asset utilization, sometimes referred to as asset depletion, allows borrowers to qualify for a mortgage based on eligible assets rather than W-2 income, pay stubs, or tax returns.
"What is asset utilization? It's a non-QM program, and it's used to verify assets instead of your traditional income," Melini explained. "We convert the borrower's eligible assets into monthly qualifying income, so there's no W-2s involved, no pay stubs, no tax returns required at all."
According to Melini, lenders begin by calculating a borrower's eligible assets, subtracting any funds needed to complete the transaction, and then dividing the remaining balance by 60 months to determine monthly qualifying income.
"You start with the borrower's eligible assets, then subtract anything that's earmarked for the transaction, and then divide it by 60 months," he said. "No employment information or pay documentation is required."
A Different Approach Than Conventional Lending
One of the key distinctions discussed during the webinar was how asset utilization differs from agency asset depletion calculations.
"When you look at it versus an agency product, in the agency world you're going to look at a retirement age 60 to 62 and older, whereas there's no age restrictions on asset utilization," Melini said.
He also noted that agency calculations typically spread assets over much longer periods.
"Your calculation is eligible assets divided by 60 months, where basically we're going to divide in the agency world by 240 months, or 360 months for Fannie, 240 for Freddie. It's a big difference there."
Melini added that Kind's program also allows cash-out transactions and investment properties while requiring only three months of asset statements.
"We allow cash-outs. We do allow investment properties. We're dividing by 60 months, not 240 or 360," he said. "We allow loan amounts up to two and a half million on our asset product, and we only need 90 days asset statements, as opposed to 12 months."
Borrowers Often Overlooked By Traditional Guidelines
A major theme throughout the webinar was the number of borrowers who may have significant wealth but struggle to qualify through conventional underwriting.
"Profiles would be obviously retirees, high net worth individuals, very wealthy clients with very liquid portfolios, self-employed borrowers with very strong financials but very complex tax returns," Melini said. "Those borrowers are getting left out in the cold."
He also pointed to investors, trust beneficiaries, borrowers living primarily from investment income, and early retirees as additional groups that may benefit.
"Investors who rely on assets or rental income, borrowers with settlement funds, trust fund beneficiaries, unemployed or non-traditional earners who might be living off their dividends or savings. Early retirees — that's a big one, because they're left out in the cold as well."
"There's just a huge, huge pool of folks here that can utilize these products."
Real-World Borrower Scenarios
To illustrate the concept, Melini shared several borrower scenarios discussed during the webinar, including retirees seeking second homes, investors with substantial portfolios but limited reportable income, and recently divorced borrowers using settlement proceeds to purchase homes.
One example involved a borrower under age 59½ who owned multiple rental properties and held approximately $5 million in investment assets.
"After reserves you're left with about $3.8 million in available assets," Melini said. "Divide that by 60 months — you get over $63,000 per month in qualifying income. Now you're in the million-and-a-half range of buying a property, and you're not at retirement age."
Another example involved a recently divorced borrower who received a substantial settlement but lacked traditional qualifying income.
"A recently divorced individual received $1.2 million in a settlement," Melini said. "After reserves you're left with $900,000 in eligible assets, divided by 60 months — it comes out to $15,000 of monthly qualifying income. Now you can go out and buy a really comfortable home and not be left out in the cold."
Eligible Assets And Common Questions
Audience questions during the webinar focused heavily on which assets can and cannot be used for qualification.
Additional attendee questions centered on how retirement accounts are treated before age 59½, whether borrowers can combine traditional income with asset utilization income, and which borrower profiles are most likely to benefit from the program.
According to Melini, eligible assets include savings and checking accounts, money market accounts, U.S. Treasuries, stocks, bonds, mutual funds, trusts, and certain settlement agreements.
"Those are what you can really use to qualify for this," he said.
Not all assets qualify, however.
"When it comes to ineligible assets, that's where you really have to take a deep breath," Melini said. "Equity in real estate, privately traded, non-vested stocks, assets that you already have producing income, irrevocable trusts, charitable trusts, donor-advised funds, and foreign assets. Those are going to be off limits as well."
He also addressed a common question regarding retirement accounts.
"If the borrower's under the 59-and-a-half threshold, it's 70%. If they're 59 and a half and older, you can use 80% of the account," Melini explained.
Combining Asset Income With Traditional Income
Another topic that generated significant audience interest was whether borrowers can combine traditional income with asset utilization income.
"Can borrowers use both traditional income and asset utilization income? Yes, you can," Melini said.
He explained that borrowers who have some documented income but still fall short of qualification requirements may be able to supplement that income using eligible assets.
"If your income is just not there yet, you have good income but you just can't qualify on that income, and you also have strong assets," he said. "When you're doing your asset utilization, you're transferring your assets into, let's say, $10,000 a month income, and you have verifiable income of $8,000. Now you have $18,000 spending power."
Building A Better Non-QM Story
Attendees asked about the most common mistakes brokers make when evaluating asset utilization opportunities.
Melini pointed to incomplete borrower analysis and insufficient collaboration early in the process.
"The most common mistake they make is not going over a complete scenario in their head — not dotting all their i's, crossing their t's," he said. "That comes with collaboration with your account executive, building the loan and making it eligible for the product."
He encouraged brokers to take the time to understand how borrowers earn income, access assets, and structure their finances before submitting a loan.
"When loans come into the non-QM world, they have to make sense," Melini said. "Ask detailed questions. When you ask detailed questions, they're going to give you the story of their life — how their income works, what they have, what they have access to and what they don't. That's how you're building that story."
Educating Referral Partners
The webinar concluded with a discussion about how brokers can identify more asset utilization opportunities by educating referral partners who may be unfamiliar with Non-QM products.
"My suggestion for all broker partners and LOs is really: touch base with your referral partners and go over this," Melini said. "Retirees, high net worth, self-employed, investors — all these folks have Realtor partners who are having a tough time finding them homes."
He encouraged attendees to proactively reach out to professionals who frequently work with borrowers holding significant assets.
"Your first phone call when you're done with this webinar should be to your Realtor partners, to financial advisors, to real estate attorneys, to divorce attorneys," he said. "You will find that a lot of those folks are not well versed and not educated that these products exist."
Melini recommends brokers take a fresh look at borrowers who may have been overlooked by traditional qualification methods.
"You can turn almost all qualified borrowers into fundable opportunities," he said. "You just have to be savvy about it."
The webinar was part of NMP's events and its ongoing Deal Desk series, which gives mortgage professionals the opportunity to bring real borrower scenarios directly to lenders and product experts for discussion and feedback.
