Asset Depletion Loans: When Assets Become Income
An asset-depletion mortgage may convert eligible liquid assets into qualifying monthly income using a lender’s formula. It can help a retired borrower, investor, or high-net-worth self-employed borrower whose portfolio is substantial but whose recurring income is limited. The lender does not simply count a balance: it verifies ownership, liquidity, eligibility, and the calculation used for the loan.
When does asset depletion fit?
Consider this path when taxable or recurring income understates the resources available to support a mortgage, but you have meaningful eligible assets. It may fit a recent business-sale recipient, retiree, investor, or borrower between income events. It may not fit when assets are mostly illiquid, pledged, restricted, or needed for the down payment and savings after closing.
How is the calculation translated?
The lender identifies eligible assets, applies any required haircut, subtracts funds needed for closing or savings after closing, and divides the usable amount by a prescribed period. The result is income the lender can use—not a cash withdrawal and not a guarantee. Formulas vary by lender and asset type, so an online estimate is only a starting point.
Illustrative example: If a lender recognized $600,000 of eligible funds and divided the usable balance across a prescribed period, the resulting monthly figure would be compared with the proposed liabilities. This is an educational example, not a quote or an lender decision.
Which assets may be considered?
- Checking, savings, and brokerage funds, subject to sourcing and eligibility.
- Vested retirement assets, often with lender-specific adjustments.
- Other holdings only if the program expressly permits them and value can be documented.
Real estate equity is not automatically liquid. A lender may treat business accounts, restricted stock, trusts, or pledged assets differently. Ask before moving funds.
Asset depletion versus other self-employed paths
| If your strongest evidence is… | Compare |
|---|---|
| Recurring business deposits | Bank statement loan |
| Property rent | DSCR loan |
| Declared income and strong compensating factors | Stated income loan |
| Large balance and complex income | Jumbo non-QM loan |
See the asset-depletion formula step by step
Use the on-site calculator with the percentage and divisor from the program you are reviewing. Your entries stay in your browser.
Having substantial savings does not mean all of it should support the mortgage
An asset-depletion program may turn eligible savings or investments into a monthly income figure for the application. The lender may reduce the balance it recognizes and subtract money needed for closing. I also need to protect the assets you want to keep for retirement, emergencies, and ordinary life.
- Which accounts are eligible and who owns them.
- What must remain after the purchase.
- Whether retirement income, standard documentation, or another path is simpler or less expensive.
Frequently asked questions
- Can I use the same assets for down payment and depletion?
- Possibly, but funds used at closing are not available for every calculation. The lender will define what remains eligible after closing.
- Does asset depletion require employment?
- Not always. The program and total profile determine what other income, credit, savings after closing, and occupancy documentation is required.
- Are retirement accounts treated at full value?
- Not necessarily. Vesting, access, age, penalties, and lender overlays can affect the recognized amount.
- Is this only for jumbo loans?
- No. Asset-depletion programs can exist at different loan sizes, but availability and formulas vary. Compare the full structure for your property.
Could eligible assets support the income review?
I’ll identify which assets may be eligible, how much may need to remain after closing, and whether another income option should be compared first.
Start with the assets you are comfortable using
If you want to test the idea, bring the types of assets, approximate balances, home price, and timing. I can help you decide whether a full review makes sense.