We tried getting an asset backed mortgage recently. There are definitely some options which don't require 20% down, although they tend to have higher APRs. Eve

We tried getting an asset backed mortgage recently. There are definitely some options which don't require 20% down, although they tend to have higher APRs. Even with 20% or more down though, we found it difficult to get a good APR. There was one lender who offered an APR which was comparable to income based mortgages (~4% for 30 year fixed), but their program had very stringent requirements. IIUC, they took 80% of our taxable assets and 60% of our retirement assets, and assumed that amount would be uniformly depleted over the mortgage term. That model seems extremely pessimistic, but I guess it accounts for the fact that some borrowers won't invest responsibly. This lender calculated a debt-to-income ratio by dividing the mortgage payments (plus HOA etc.) by the asset depletion income, and required that the ratio be at least 66. I think different programs have different debt-to-income requirements. So let's say a borrower wanted a $1m mortgage from this program. If it's 30 years fixed at 4%, the total mortgage cost would be ~$1.7m. To reach the 66% debt-to-income with their formula, the borrower would need ~$3.2m of taxable assets, or ~4.3m of retirement assets! That's assuming no other income, no HOA fees, etc. There are other programs with less stringent requirements, but they seem to have APRs of at least 5%.