Using pledged assets as a down payment

As the lending industry tightens the belt on requirements there are options that borrowers may want to consider to help them qualify for a home loan. One option is using pledged assets in lieu of a down payment.

Pledged assets are exactly what they imply. They are assets that are pledged as security for a down payment. For example, if you have $50,000 in liquid assets and your son/daughter is trying to qualify for a home you have 2 ways to help them come up with the down payment. You can give them the cash in the form of a gift or you can pledge the assets as security for the down payment. This can be very helpful in the case where you don’t want to just give away the $50,000 but want to help.

The key is that the assets must be deposited with the bank that offers this program. There is no security for them in taking assets held elsewhere. It is not an advertised program and is offered by banks that service their own loans. Most banks and lenders sell the loans after they are funded. These lenders can not offer pledged assets. Ask your loan officer about pledged assets. Many are not even aware this option exists.

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