In this article 14 sections
- What is an asset-based jumbo loan?
- How does the AR Loan turn assets into income?
- Which assets count, and at what value?
- Why are funds to close and reserves set aside first?
- How much can I borrow on an asset-based jumbo loan?
- How much in assets do I need to qualify?
- What does a complete AR Loan calculation look like?
- What does the underwriter check on the accounts?
- Who is the AR Loan built for?
- Do I have to sell, pledge or move my investments?
- Can an asset-based jumbo loan be interest-only?
- Which properties and states qualify?
- When is the AR Loan the wrong tool?
- What is the process, and how long does it take?
- Questions, answered plainly
What is an asset-based jumbo loan?
An asset-based jumbo loan is a mortgage above the conforming limit that qualifies the borrower on the size of their documented, eligible assets rather than on salary, business profit or a tax return. Mbanc Private Client Lending calls its version the AR Loan, and it is one of four programs on the desk, alongside the Founder Loan (bank statements), the Operator Loan (1099s) and the IL Loan (rental property).
The terms asset depletion and asset utilization are often used interchangeably in residential lending. Both describe the same idea: a person with substantial liquid wealth can carry a mortgage payment whether or not a paycheck arrives, so the underwriter converts that wealth into a monthly income figure and runs the ordinary tests against it.
Every loan on this desk sits above the baseline conforming limit. For 2026 the Federal Housing Finance Agency set the baseline conforming limit for a one-unit home at $832,750, with a high-cost ceiling of $1,249,125. Private Client Lending begins at a $1,000,000 loan amount, above the baseline everywhere and above even the high-cost ceiling on most files. A loan of $1,000,000 to $1,249,125 in a designated high-cost county can still be conforming. If your loan amount is under $1,000,000, the core Mbanc desk at mbanc.com or (844) 918-1886 is the right door.
The program sits inside Mortgage Bank of California Inc. dba Mbanc (Company NMLS #38232), a direct mortgage bank that underwrites and funds in-house. It is long-term, fully underwritten residential mortgage financing, not short-term hard money or bridge capital. Mbanc is not a depository: it takes no deposits and takes custody of nothing, which is the reason the AR Loan can read your assets without asking you to move them.
How does the AR Loan turn assets into income?
The AR Loan divides your eligible assets, after the money needed for the transaction is set aside, by 84 and treats the result as monthly qualifying income. The formula, written the way an underwriter writes it, is:
(Eligible assets less funds to close less required reserves) / 84 = monthly qualifying income.
A short ledger, like a statement. Eligible assets, the accounts that count, read where they sit; less funds to close and required reserves: the down payment, closing costs and reserves, set aside first. What counts sits over a line with 84 beneath it, and equals monthly qualifying income.
Nothing is sold or moved: the accounts are read where they sit.
The process runs in five steps:
- Inventory. List every account: checking, savings, money market, brokerage, and retirement (IRA, 401(k), and similar).
- Value. Apply the investor guideline's valuation for your file: cash at 100%, publicly traded securities at 70% to 80%, retirement at 60% to 80% depending on your age.
- Set aside. Subtract the down payment, closing costs and required reserves. Those dollars are spoken for and are not counted twice.
- Divide. Divide the remainder by 84. The result is monthly qualifying income.
- Test. Run the standard ratios: total monthly debt no more than 50% of that income (DTI, or debt-to-income ratio), and at least $1,500 of monthly residual income left after all debts. The eligible assets left after the set-aside must also be at least the lower of $1,000,000 or 150% of the loan amount.
The divisor of 84 equals seven years of months. It is a measurement convention, not a spending plan: nobody draws the account down, and the guideline does not ask you to withdraw anything. Agency programs that allow assets as income use far longer divisors, which is why the same balance sheet produces several times more qualifying income here. The full mechanics are in the asset depletion formula, and why the divisor is 84.
One consequence matters more than any other. Because the formula reads the balance sheet, your tax return never enters the income calculation. The CPA who legally minimized your taxable income has not cost you anything, a point we make at length in the write-off paradox.
Which assets count, and at what value?
Liquid, verifiable balances in accounts you own count: cash, CDs and short Treasuries at 100% of value, publicly traded stocks, bonds and mutual funds at 70% to 80%, and retirement accounts at 60% to 80% depending on your age; the investor guideline for your file sets the share within each range. The discount on securities reflects market movement between statement and closing; the discount on retirement money reflects that withdrawals from traditional retirement accounts are generally taxable, and withdrawals before 59 1/2 can carry an additional tax. On an investment property the shares can differ.
| Asset | Share of the balance that counts |
|---|---|
| Checking, savings, money market, CDs, short Treasuries | 100% |
| Cash-surrender value of life insurance | 100% |
| Publicly traded stocks, bonds and mutual funds | 70% to 80% |
| Retirement accounts (IRA, 401(k), 403(b)), borrower 59 1/2 or older | 70% to 80% |
| Retirement accounts, borrower under 59 1/2 | 60% to 70% |
| Assets in a revocable trust (borrower is trustee); real estate sale proceeds once deposited | Counts, as the type of asset held |
| Business-held funds, private or restricted or unvested stock, annuities, donor advised funds, foreign assets, joint accounts with people not on the loan, gift funds | Ineligible |
| Real estate equity | Not read by this formula |
Source: Mbanc guideline, indicative eligibility ranges as of October 2026. Not an offer of credit.
Three practical points follow. First, the account must be documented: 3 to 4 months of statements showing ownership and balance, with the funds seasoned 90 days, the balance verified within 10 days of closing, and every owner of a counted account on the loan. Second, the formula reads what is in the account, not what is promised: a sale that has not closed, a signed purchase agreement for a company you are selling, an earnout not yet paid or a distribution not yet made is not an asset the formula can count; deposits and assets must be in hand. Third, equity in property is not liquid wealth; a rental portfolio usually belongs on the IL Loan, which qualifies the property on its rent.
Crypto is sometimes used, as a write-in, when the money is documentable; spell it all out when you speak with Mayer. Equity compensation counts once it has vested and sits as publicly traded shares in a brokerage account; restricted and unvested shares do not count. Which accounts are typically considered is set out in the asset depletion calculator.
Why are funds to close and reserves set aside first?
Because a dollar cannot be spent on the down payment and also counted as income that pays the mortgage. The guideline subtracts the down payment, closing costs and required reserves before it divides by 84, so the income figure rests only on money that remains after closing.
Reserves are months of PITIA held in liquid form after closing. PITIA means principal, interest, taxes, insurance and association dues: the full monthly housing cost. The requirement scales with LTV and loan amount, and on an interest-only loan it is measured on the interest-only payment.
| Loan amount and LTV | Required reserves |
|---|---|
| Rate-and-term refinance at a lower LTV (the desk confirms the threshold) | None |
| $1,000,000 to $1,500,000 | 3 months PITIA |
| Over $1,500,000 to $2,500,000 | 9 months PITIA |
| Over $2,500,000 | 12 months PITIA |
Source: Mbanc guideline, indicative eligibility ranges as of October 2026. Not an offer of credit.
The set-aside is not a cost. Reserves stay in your accounts; the guideline simply declines to count them twice. For a borrower with $8,000,000 of eligible assets, the set-aside barely moves the result. For a borrower at the margin, it can decide the file, which is why we calculate it on the first call rather than at underwriting.
How much can I borrow on an asset-based jumbo loan?
The AR Loan runs from a $1,000,000 loan amount to a $3,000,000 standard maximum, and up to $4,000,000 on a primary-residence purchase with a 720 or higher credit score. Second homes, investment property and cash-out stop at $3,000,000. Within that range, two limits set the real number: the maximum loan-to-value ratio (LTV, the loan amount divided by the property value) and your debt-to-income ratio on the asset-derived income.
The LTV ceiling is read from one ladder banded by occupancy, credit tier and loan amount; exact LTV is a file conversation.
One more rule completes the picture. Gift funds are not permitted on the AR Loan, so the down payment is your own money.
The credit floor is 680. A file below 680 does not belong on this desk.
How much in assets do I need to qualify?
At the 50% DTI cap, you need about $168 of eligible assets, after the set-aside, for every $1 of total monthly debt, including the new housing payment. That figure is derived arithmetic: income must be at least twice the debt, and each dollar of monthly income takes $84 of assets, so 84 x 2 = 168.
| Total monthly debt (new PITIA plus other debts) | Minimum qualifying income at 50% DTI | Eligible assets needed after set-aside |
|---|---|---|
| $10,000 | $20,000 | $1,680,000 |
| $15,000 | $30,000 | $2,520,000 |
| $20,000 | $40,000 | $3,360,000 |
| $25,000 | $50,000 | $4,200,000 |
| $30,000 | $60,000 | $5,040,000 |
Source: Mbanc analysis, derived arithmetic from the guideline formula (assets / 84) and the 50% DTI maximum, October 2026. Minimums only; the residual income test also applies. Not an offer of credit.
Read the table as a floor, not a target, and read it alongside the guideline's own floor: eligible assets after the set-aside must be at least the lower of $1,000,000 or 150% of the loan amount, so a $1,000,000 loan needs at least $1,000,000 left over and a $3,000,000 loan the same. Files that sit exactly at 50% DTI have no room for an appraisal that comes in light or a tax bill higher than estimated. In practice the cleanest AR files carry a DTI well under the cap, because people who qualify on assets usually have more assets than the minimum. And remember that the debt column includes everything on the credit report: other mortgages, auto payments, and lines with balances.
If the arithmetic comes up short, the honest options are a larger down payment, a smaller loan amount, paying off a debt before closing, or a different program. A borrower with strong deposits as well as assets may qualify better on the Founder Loan; the trade-off is set out in bank statement jumbo vs. asset-based jumbo.
What does a complete AR Loan calculation look like?
A complete calculation inventories the accounts, applies the valuation, subtracts the set-aside, divides by 84, and then tests DTI and residual income. Here is one end to end, using stated assumptions and no interest rate.
Worked example
The file: a primary-residence purchase with a $2,400,000 loan amount, borrower aged 62, credit score 735, fully amortizing. Assume closing costs of $75,000.
Step 1, value the assets. Checking, brokerage and an IRA (the borrower is over 59 1/2), each counted at the share of its balance the investor guideline for the file applies: $300,000, $3,360,000 and $1,200,000 in this illustration. Eligible total: $4,860,000.
Step 2, set aside. The down payment, closing costs of $75,000 and reserves of 9 months of PITIA (the loan is over $1,500,000). Set-aside total: $823,500.
Step 3, divide. ($4,860,000 less $823,500) / 84 = $4,036,500 / 84 = $48,054 of monthly qualifying income. The $4,036,500 remaining clears the minimum of $1,000,000 (the lower of $1,000,000 or 150% of the loan amount).
Step 4, test. PITIA and any other monthly debts come to about 40% of the $48,054 of monthly qualifying income, under the 50% cap. Residual income, what is left after them, is well above the $1,500 minimum.
Result: the file qualifies with room to spare. At the 50% cap, the same income would support total monthly debt of about $24,027.
Notice what the example did not require: no tax return, no employment verification, no sale of a single position.
What does the underwriter check on the accounts?
The underwriter checks four things on each account: that it exists, that you own it, what it is worth today, and where any recent large deposit came from. Asset files are simpler than tax-return files, but they are not lighter; the scrutiny moves from the income to the balance sheet.
- Existence and ownership. Recent statements, every page, showing your name (or your revocable trust) as owner. Business-held funds and joint accounts with someone who is not on the loan are ineligible, so if an account sits inside an entity or is shared, raise it on the first call; every owner of a counted account must be on the loan. Balances must be seasoned 90 days, and they are verified again within 10 days of closing.
- Current value. Brokerage balances move with markets. The figure used is the documented balance, and a file built with no margin above the requirement can be undone by a weak month between application and closing. We size files with that in mind.
- Vested, accessible retirement balances. The guideline's valuation applies to money you can actually reach. A statement that shows unvested employer contributions separately helps.
- Sourcing. A large recent deposit needs a paper trail: a sale closing statement, an inheritance distribution, a transfer from another account you own. Transfers between your own accounts are not new money and are not counted twice. The common questions are covered in large deposits on a jumbo loan.
Borrowed money is not an asset for this purpose. A draw on a line of credit sitting in checking is offset by the debt that created it, and the payment on that debt counts in your DTI. If you plan to fund part of a purchase with borrowed money, say so on the call; it changes the arithmetic, and it is far better discovered on day one than at underwriting.
What the underwriter does not check is equally telling: no employment verification, no profit and loss statement, no business tax returns, no explanation of why your taxable income is low. Under the federal Ability-to-Repay rule, on a home you live in, every mortgage lender must make a reasonable, good-faith determination that the borrower can repay. The AR Loan meets that obligation with the balance sheet, which for this borrower is the more accurate document.
Who is the AR Loan built for?
The AR Loan is built for people whose wealth is real and liquid but whose income, as a tax return or an employer describes it, is small, irregular or absent. On this desk that is the profile we call The Asset Rich, and it shows up in five recurring situations.
- The founder after an exit. The company is sold, the proceeds sit in a brokerage account, and there is no W-2, no business and no history of the new life. The year of the sale produces a tax return no underwriter can annualize. See buying a home after selling your company.
- The retiree living on capital. No employment, distributions taken when wanted rather than on a schedule, and a balance sheet that could carry the payment many times over. Age is not a factor in eligibility; the one age-linked rule is the retirement-account valuation, which can differ before and after 59 1/2 because of the IRS early-distribution tax. If your income is unusual, spell it all out when you speak with Mayer.
- The heir. Inherited wealth in accounts, with earned income that bears no relation to the assets.
- The investor between chapters. Someone who has sold a portfolio, a practice or a stake and is holding cash and securities while deciding what comes next.
- The high earner whose balance sheet is the simpler document. Some clients have ample income but a balance sheet that qualifies them more simply. If the assets carry the file, the assets are the cleaner document.
The common thread is not net worth. There is no AUM or net-worth minimum on this desk. The thread is that the balance sheet tells the truth about ability to repay and the tax return does not.
Do I have to sell, pledge or move my investments?
No. The AR Loan reads statements from wherever your accounts are held; nothing is liquidated, nothing is pledged as collateral, and nothing moves into Mbanc's custody, because Mbanc takes no custody of anything. The home is the collateral, exactly as on any mortgage.
That distinguishes the AR Loan from the two other ways wealth is commonly used to finance a home. A securities-based line of credit lends against a pledged portfolio, and the SEC and FINRA note it is classified as a demand loan the lender may call at any time, with a maintenance call if the collateral falls. A pledged-asset mortgage reduces or replaces the down payment by pledging securities as additional collateral, which keeps them encumbered while the pledge lasts.
| Sell and pay cash | Securities-based line | Pledged-asset mortgage | AR Loan | |
|---|---|---|---|---|
| Portfolio stays invested | No | Yes, but pledged | Yes, but pledged | Yes, unencumbered |
| Assets pledged to the lender | Not applicable | Yes | Yes | No |
| Collateral calls if markets fall | Not applicable | Yes | Possible | No |
| Term | Not applicable | Demand loan, callable | Mortgage term | Long-term mortgage |
| Realizes taxable gains | Often | Only on forced sales | Only on forced sales | No sale involved |
Source: Mbanc guideline as of October 2026; SEC and FINRA investor alert on securities-backed lines of credit. Product terms vary by provider. Not investment or tax advice.
Each structure has a place, and we set them side by side in financing a home without liquidating your portfolio. Whether to sell, borrow or both is an allocation and tax question for your wealth manager and CPA. Mbanc finances; it does not advise.
Can an asset-based jumbo loan be interest-only?
Yes. The AR Loan is available with an initial interest-only period on a long-term structure, and the file is qualified on the fully amortizing payment, not the lower interest-only payment. That qualification rule matters on an asset file: the 84-month income has to carry the payment you will owe after the interest-only period, not just the one you will owe at the start.
After the interest-only period ends, the loan amortizes over the remaining term and the payment rises, sometimes sharply. Paying down principal during the interest-only years is elective, not scheduled; how your loan treats extra principal is set out in your loan documents. Asset-rich borrowers often choose interest-only precisely because they would rather keep capital invested and decide for themselves when to reduce principal; that is a reasonable choice for some households and a poor one for others. The risks are set out plainly in is an interest-only mortgage risky, and the structure is on the interest-only jumbo loans page.
Interest-only does not reduce the maximum LTV on the AR Loan, and reserves on an interest-only loan are measured on the interest-only payment. Fully amortizing structures are available too. The interest-only period, full term, and payment before and after are disclosed in writing before anything is signed.
Which properties and states qualify?
The AR Loan finances primary residences, second homes and investment property in 22 states, and investment property only in a further 24 states plus the District of Columbia. The 22 full-occupancy states are Arizona, California, Colorado, Connecticut, Florida, Georgia, Idaho, Illinois, Maryland, Michigan, Nevada, New Jersey, North Carolina, Ohio, Oregon, Pennsylvania, South Carolina, Tennessee, Texas, Utah, Virginia and Washington. New York, Massachusetts and Hawaii are among the investment-only states, so a primary residence there is not available. The desk does not lend in Minnesota, Missouri, North Dakota or South Dakota. The complete map is on the licensing page.
On property type: warrantable and non-warrantable condos, condotels to a $2,500,000 loan amount and 2 to 4 unit properties are eligible; co-ops are not financed anywhere; completed properties only, with no construction draws; unique properties case by case. Loans over $2,000,000 require two full appraisals from different companies, with the lower value governing; up to $2,000,000, one appraisal plus a desk review. Investment property may vest in an LLC, partnership or corporation formed to hold real estate, with every applying member signing a personal guaranty or the Note. Title can vest in a revocable trust, never an irrevocable trust, land trust or IRA, which matters to retirees and heirs whose estate plan already holds everything in trust.
When is the AR Loan the wrong tool?
The AR Loan is the wrong tool when your income already qualifies you cleanly, when your wealth is mostly illiquid, or when the loan is under $1,000,000. Saying so up front is part of the job.
- You have a clean W-2 and conforming documentation. A conventional jumbo underwritten on pay stubs and returns will usually price better. The comparison is in non-QM jumbo vs. conventional jumbo.
- Your wealth is in real estate or a private company. The formula reads liquid balances. Equity in buildings and shares in a business you own do not convert. Rental owners usually belong on the IL Loan; operating founders on the Founder Loan.
- Your assets barely clear the requirement. If the file only works at 50% DTI with nothing to spare, a larger down payment or a smaller loan amount is the wiser structure.
- Your credit is below 680, or you have recent housing lates, an open foreclosure or an unseasoned bankruptcy. Bankruptcy, foreclosure, short sale, deed-in-lieu and loan modification each need 36 months of seasoning from the application date for full terms (24 months at a lower maximum LTV and $1,500,000), and no more than one 30-day mortgage late is allowed in the last 12 months.
- You are shopping on rate alone. Asset-based financing is priced for documentation that conventional underwriting does not accept. If rate is the only variable that matters to you, this is not your desk.
What is the process, and how long does it take?
The process starts with a 15-minute conversation with no application and no credit pull, and recent complete files have closed in about 15 days, which is typical experience and not a commitment. Timing depends on appraisal, title and how complete the file is when it arrives.
- A conversation. Mayer Dallal, Managing Director and founder of Private Client Lending, reads every inquiry and makes the call himself. Bring four facts: occupancy, state, loan amount and how your wealth is held. No rate target is needed. You leave the call with a direct answer: what the file would take, or that it is not a fit.
- What your file would take. A short list: identity, recent statements for each account you want counted, evidence of funds to close, and the purchase contract if you are buying. Documents upload through the Aura portal. If you are buying, the appraisal, title and any condo review follow once the home is under contract.
- Terms in writing. Your terms, including whether a prepayment penalty applies, are set out in writing before anything is signed. Credit is pulled only when you choose to proceed, and one banker owns the file to closing.
The Mbanc funded-loan record gives the context. Between February 2021 and 7 July 2026 the desk funded 440 loans of $1,000,000 or more, $720.8 million across 24 states; 92% were on alternative or no-ratio documentation, and 97% of loans submitted to underwriting funded. That pull-through rate is the product of underwriting the file thoroughly before it is submitted, which is what the first call is for. The program summary is on the asset-based jumbo loans page.
Sources
- FHFA announces conforming loan limit values for 2026
- CFPB Regulation Z, 12 CFR 1026.43 (Ability-to-Repay)
- 12 CFR 1002.6, Regulation B rules concerning evaluation of applications
- SEC and FINRA investor alert: Securities-backed lines of credit
- Fannie Mae Selling Guide B3-3.4-06, Employment-related assets as qualifying income
Loan amounts, credit scores, loan-to-value ratios, reserves and other figures in this article are indicative eligibility ranges as of the date shown. They are not an offer of credit or a commitment to lend. All loans are subject to underwriting approval, property eligibility, and the guideline in effect at the time of application. Programs, terms and availability change without notice. Close times quoted reflect recent experience on complete files and are not a commitment. Interest-only payments increase when amortization begins. Whether a prepayment penalty applies is disclosed in writing before anything is signed.
Eligibility figures as of 4 November 2026.
