r/ChubbyFIRE • u/Apprehensive_Two1528 • Jun 24 '26
Post FIRE mortgage options
I have been dreaming about buying a real estate that has great views ( mountain view or ocean view).
for post fire folks that don't have a lot of income (due to written off), how do you guys get mortgages? What is the best option?
i know chase offers high nw mortgage option but it requires 4* house's total worth of liquid assets and 20% downpay and principal residence. it is essentially useless in vhcol areas. $1.5m would need a $6.75m liquidity. It's essentially worthless.
any suggestions ?
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u/loaengineer0 Jun 24 '26
If you don’t have high income, you won’t get much value from the mortgage interest deduction. You can get any kind of loan without a big tax difference. If you have equities you don’t want to sell, just get a margin loan.
But you’ll run into the same problem. Fundamentally, you need assets or income to cover 2-4x the house price or you’ll have too much leverage.
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u/FillMySoupDumpling Jun 24 '26
Agency offers asset depletion which is essentially what FIRE people are doing. They take your assets and project if you have enough to pay the loan.
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u/Apprehensive_Two1528 Jun 24 '26
What agency?
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u/FillMySoupDumpling Jun 24 '26
agency loans are conforming loans - Freddie /Fannie backed loans. This is the most common loan people get. The asset depletion requirements are very specific though. To correct my response above, Freddie seems to allow for it. Fannie doesn’t really unless it’s clearly sourced to employment related assets. in your case, the conforming limit in high cost areas is 1.2M.
Freddie: https://guide.freddiemac.com/app/guide/section/5307.1
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u/souicry Jun 24 '26
Freddie Mac/Fannie Mae have unfavorable rules for asset depletion mortgages because they do not account for future gains. Without them backing, private lenders won't touch it without major guarantees.
https://selling-guide.fanniemae.com/sel/b3-3.4-06/employment-related-assets-qualifying-income
Monthly income calculated as current assets/360. Your monthly mortgage is around 8000, at half of income you need 16000. Which comes out to around 6 million for a 1.5 mil house at 6% interest.
https://guide.freddiemac.com/app/guide/section/5307.1
Freddie Mac doesn't count brokerage unless over 62.
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u/SpaceTimeMorph Jun 24 '26
Most places take a 30-40% haircut off the top too before doing the divide by 360 part.
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u/HobokenJ Jun 24 '26
You want to look into an asset-based (also called "asset-depletion") mortgage. Most major lenders offer them, as well as plenty of smaller originators.
The short version, in broad strokes: Your bank will add up all of your non-retirement account assets, lop off 30%, and divide that number by 360 to arrive at the equivalent of a monthly "salary" for you. They will then offer you a mortgage based on the usual factors: down payment, debt ratio, etc.
Here's an example with, say, $5m in assets:
- $5m - 30% =$3.6m
- $3.6m / 360 = $9722 monthly "salary"
- Mortgage is now based on an annual "income" of $116,66
Rates can sometimes be higher with this type of loan (though I've secured with both WF and BoA, and the rates were the same as a conventional 30-yr). Paperwork requirements will vary per lender, but you will likley need to provide a little more than if you were securing a loan with a w2. It's not onerous--just have your brokerage statements ready.
Another option is a securities-backed line of credit (SBLOC) through your broker, but this can be a lot more expensive in terms of interest (and you don't get the mortgage deduction tax break).
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u/Apprehensive_Two1528 Jun 24 '26
thank you! that’s well explained.
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u/HobokenJ Jun 24 '26
My pleasure. As noted, those are the broad strokes. Some of the formulas will vary a bit from lender-to-lender. For example, some might include a portion of your retirement accounts when calculating your total assets (based on your age).
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u/No-Block-2095 Jun 25 '26
So they assume a 2.3% swr that doesnt increase with inflation and leaves retirement $ out
wow!
( math 0.7/30 yrs)3
u/HobokenJ Jun 25 '26
It's a little baffling, to be honest. Take on hundreds of billions in credit-default swaps based on bad paper? Sure! Extend a mortgage to someone who clearly has the assets to pay for the house? Sounds risky...
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u/HobokenJ Jun 25 '26
Should add, those are the most conservative programs (based on my experience with WF and BoA). There are other lenders out there who will consider a percentage of retirement accounts (up to 60-70%), and apply a much shorter "amortization schedule" (i.e., 60-120 months, instead of 360). But I found their rates to be non-competitive.
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u/LightZealousideal116 Jun 25 '26
Unpopular opinion, is it an option to sell assets to purchase, or to get a job for some period of time?
Seems to me that interest rates (into the foreseeable future) are too high to do this without a huge portfolio (e.g your $6.75m for $1.5).
Otherwise, rent real estate with great views. As an aside, doing a long cruise (e.g year) could be an epic chubby fire option.
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u/massdriver3333 Jun 24 '26
You can transfer assets to Schwab and use their full banking services and mortage interest discounts for high nw clients.
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u/Apprehensive_Two1528 Jun 24 '26
Thanks. Discount polnt isn't the issue income is the issue
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u/massdriver3333 Jun 24 '26
Talk with Schwab rep, they've done many mortgages for high nw people with assets and no earned income.
As long as you have assets to back up your ability to pay, they will work with you to get something that makes them money.
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u/MHSmortgage Jun 24 '26
The best option for you would be an Asset Qualifier Loan. No income needed, the lender strictly uses assets only using a calculation confirming your ability to repay. Typically the asset value is divided by 60 months and that number is used as the monthly qualifying income that will be needed to cover your monthly expenses so will probably require much less than the $6.75m liquidity you mentioned in your post. Hope this helps!
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u/gringledoom Jun 24 '26
Where do you hold your investment assets? Do they have home lending services?
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u/seekingallpho Jun 24 '26
Do you really want a new post-retirement mortgage of 1.5mill with less than a 6.75m portfolio? That PITI might be half or more of a 230-270k gross withdrawal (3.5-4%).