Lots of cash, no income, young investor. How can I get a mortgage?

Asked by Julianne, 94303 Sat Jun 25, 2011

I am in my early twenties, have several million in cash, and will be working for $20000/yr as an intern before applying to law school. My credit score is 720. I'm interested in buying a teardown in Palo Alto and building. I could theoretically do this in all cash, but I'd rather get a mortgage for the house I buy to teardown. Will I be able to get a mortgage if I have little to no income, and am very young? My father is retired, so he also does not have income.

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Stephen Keese’s answer
Stephen Keese, , Palo Alto, CA
Sat Jun 25, 2011
Lenders require proof of ability and intention to make your mortgage payments. The first comes from your paystub or job offer letter. The second from your credit score. They also will appraise the property to make sure it's worth what you are paying for it and there is no hanky panky involved.

If you have a large account with an investment or financial management firm, they might be willing to work something out with you using that account as collateral. Give them a call.

Is your intention to live in the house or sell it after building the new home? If you plan to sell, you might be able to find an financial partner. Without a track record of flipping properties it won't be easy, but you might be able to put together a compelling case with a complete plan and numbers. Then ask around your family and friends' acquaintances. Somebody might be willing to back you.

If you plan to live in it and you have enough cash, you can buy and build with your money now and then refinance after you finish law school and have a good income to cover the mortgage payments.

The only other way to do what you want is to have the seller finance your purchase. That is done in desperate markets but will be almost impossible to do in Palo Alto. You have a lot of competing builders here, and they have cash.
Web Reference:  http://www.apr.com/skeese
1 vote
Michael Abram, , Los Angeles, CA
Thu Jun 30, 2011
Hello Julianne,

The asset depletion loan is a great option. I'm working a file right now that is based on giving an individual additional income based on the account being used for asset depletion. If I can be of assistance, please feel free to contact me.

Michael Abram
First Capital Mortgage
NMLS #235060
Direct: (310) 434-1718
Fax: (310) 451-6407
0 votes
John Arendsen, Agent, Leucadia, CA
Wed Jun 29, 2011
You should be able to find a lender that would give you a dollar for dollar loan. I'd start with the institution/s who hold your account/s. I'm assuming you have your millions spread around several institutions being that the FDIC has a cap on what they will insure in one account. I can't imagine any lender turning you down if you are willing to collateralize dollar for dollar. Just a thought.
0 votes
April Tavares, Agent, Campbell, CA
Mon Jun 27, 2011
Someone with millions in "cash" should certainly have access to a wealth management consultant. Speaking with such a person, may be the best first course of action. If after having the discussion about what your long and short term goals are results in the determination that the best way to grow your "cash" is to purchase property, your wealth management consultant should be able to help you work through the best way to finance the project.

All the best,
April Tavares, GRI, ASP
Realtor®, DRE License #01742179
Montalvo Realty
Direct: 408-309-5471
Email: April@AprilTavares.com
Free Santa Clara County Market Trend Reports: http://april.rereport.com
Web Reference:  http://www.AprilTavares.com
0 votes
Brian LeBars, Mortgage Broker Or Lender, Pleasanton, CA
Mon Jun 27, 2011
Hi Julianne...

The answer below is correct. There are loans for asset dissipation that may fit your needs. I think in your situation a full financial review will help shed light on whats possible. Call me anytime if you need help!
Web Reference:  http://www.loansquawk.com
0 votes
Bentley Advi…, , San Mateo, CA
Sun Jun 26, 2011
You may qualify for a loan based on asset dissipation. Happy to provide details. I specialize in jumbo loans on the Peninsula including Palo Alto and can do as little as 20% down up to $2M loan amount. Let me know.
0 votes
C2 Financial…, Mortgage Broker Or Lender, San Diego, CA
Sat Jun 25, 2011

There is asset depletion loan option which sounds like it may be the right choice for you. It would factor in the current value of your money assets as opposed to your gross salary per year. Feel free to contact me with further details.

Web Reference:  http://www.bma-loans.com
0 votes
Rudi Hofmann, Mortgage Broker Or Lender, El Segundo, CA
Sat Jun 25, 2011
Millions in cash doesn't make sense. Millions in assets does. There are several types of asset formulas that portfolio lenders offer. One might work for you, but not on a tear-down. You might try private money. You will probably be able to receive around 50% LTV on a tear-down.

Happy funding, Rudi
Web Reference:  http://www.umboc.com
0 votes
Andrea Wince…, Agent, Milpitas, CA
Sat Jun 25, 2011
Sit down with a mortgage loan officer and have them prequalify you by analyzing all of your financials.
0 votes
Marcy Moyer, Agent, San Ramon, CA
Sat Jun 25, 2011
Your age is not an issue, but income can be. If you get a loan the lender will want to know how you are going to pay it back. I would suggest that you speak to lenders who specialize in high wealth clients to see what they say. Absolute Mortgage in Palo Alto is a good source, or perhaps First Republic Bank.

Marcy Moyer
DRE 01191194
Web Reference:  http://www.marcymoyer.com
0 votes
David Tapper, Agent, Burlingame, CA
Sat Jun 25, 2011
Hi Julianne,

If I were you, I would talk with your personal banker. Someone who knows your financial history. If not, I may be able to refer you to a private loan from an indivisual. Many institutional lenders don't care how much money you have, they go by income and credit scores.

Feef free to call to discuss further. If not, best of luck.

Coldwell Banker
0 votes
Terri Vellios, Agent, Campbell, CA
Sat Jun 25, 2011

You should talk with a lender. Our lender just got a loan for someone who is unemployed, living at home 20% down on a duplex. Not everyone qualifies so the details of your transaction, income, etc. are unique.

Good question!
Web Reference:  http://www.terrivellios.com
0 votes
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