Asset Depletion Loans Explained: Qualify on Net Worth, Not Income

Asset depletion loans solve a specific problem: you have significant wealth but limited monthly income on paper. Retirees, high-net-worth individuals, and borrowers who live on investment distributions rather than a paycheck face this situation constantly. An asset depletion loan converts your eligible assets into qualifying income using a formula — no job required, no Social Security required, no tax return income required.

The logic is straightforward: if you have $2 million in a brokerage account and want to borrow $600,000, the lender's risk is not that you can't repay. The risk is that you won't. Asset depletion programs address this by treating your assets as if you were depleting them over time to make mortgage payments — creating a calculated "income" figure for qualification purposes. This guide explains exactly how the calculation works and what you need to qualify.

How the Asset Depletion Formula Works

The core of an asset depletion loan is the income calculation. Different lenders use slightly different methodologies, but the standard formula is:

Example: A 65-year-old borrower has $1,800,000 in eligible assets. The lender uses a 240-month depletion period (reflecting a 20-year runway from age 65). Monthly qualifying income = $1,800,000 ÷ 240 = $7,500/month. At a 43% debt-to-income ratio, that supports approximately $3,225/month in total debt payments — enough to qualify for a substantial mortgage.

Not all lenders use the same formula. Some lenders:

• Divide by 360 regardless of borrower age
• Apply a discount factor before the division (e.g., 70% of assets for retirement accounts)
• Allow a portion of employment income to be combined with asset depletion income
• Use a shorter depletion term for borrowers closer to or in retirement

The variation in formulas means the qualifying income you receive can differ significantly between lenders. Running the calculation with multiple lenders is worth doing.

Which Assets Count?

Not all assets are treated equally. Lenders evaluate asset eligibility based on liquidity and how quickly funds can be accessed. Here's the typical breakdown:

Assets must be seasoned — typically in the account for at least 60 days. Large recent deposits or transfers will be questioned. If you recently moved assets between accounts or liquidated other holdings, provide documentation of the source.

Credit Score Requirements

Asset depletion programs are available for borrowers with minimum credit scores of 620 at most lenders, with the standard premium structure:

• 620–659: Minimum tier. Higher rates, lower LTV (typically 70–75% max), stricter reserves on top of qualifying assets.
• 660–699: Mid-tier. Standard pricing, 75–80% LTV available.
• 700–739: Good pricing, 80–85% LTV in some programs.
• 740+: Best rates, highest LTV access, most lenders available.

Asset depletion borrowers are often high-net-worth individuals with strong credit — a 740+ score is common in this borrower profile. The rate at that tier is competitive with conventional jumbo products.

Down Payment Requirements

Asset depletion programs are typically used for higher loan amounts — and the down payment requirements reflect that:

• Primary residence: 20–30% down at most lenders. Some programs allow 15% down with 720+ credit and strong asset reserves.
• Second home: 25–30% down.
• Investment property: 25–35% down, depending on lender and credit.

An important nuance: the down payment funds and the assets used for income calculation are not the same pool in most programs. Lenders want to see that after you close — and after your down payment leaves the account — you still have sufficient assets to support the income calculation. Some lenders require 1.5–2x the qualifying assets to remain post-close.

Asset Depletion vs. Other Non-QM Options

Asset depletion is one of several Non-QM programs for borrowers with unconventional income profiles. Here's when it wins and when another product is better:

vs. Bank Statement Loans

Bank statement loans require active business income and ongoing deposits. If you're retired or not running a business, bank statement programs don't apply. Asset depletion is the right product for borrowers whose wealth is invested rather than flowing through a business.

vs. DSCR Loans

DSCR loans are for investment property purchases where the property's rental income supports the debt service. If you're buying a primary residence or a property that won't generate rental income, DSCR is not applicable. Asset depletion works for any property type.

vs. Conventional Jumbo

If you have both assets and employment or investment income that's clearly documented, conventional jumbo underwriting might work. But conventional jumbo requires documented, regular income — dividends, distributions, and pension income must be consistent and documented across two years. Asset depletion is for situations where income documentation doesn't fit the conventional model.

Combining Asset Depletion with Other Income

Asset depletion income can often be combined with other income sources to increase your total qualifying income:

• Social Security income: Social Security is counted at 100% (and sometimes grossed up by 125% because it's tax-advantaged) in most Non-QM programs. Adding Social Security to asset depletion income typically improves the qualification significantly.
• Pension or annuity income: Documented pension income from a former employer is fully countable alongside asset depletion income.
• Part-time employment income: If you work part-time in retirement, that income is included if documentable. Even modest regular income adds meaningfully to the total qualifying figure.
• Rental income: If you own other rental properties, rental income (typically at 75% of gross rents) can be added to the qualifying income stack.

What Documents Do You Need?

The asset depletion documentation package includes:

• Most recent two months of statements for all accounts used in the calculation (all pages)
• For retirement accounts: documentation showing the borrower is at least 59½ or has penalty-free access
• For trust accounts: full trust agreement and documentation of borrower's access rights
• For business accounts: proof of majority ownership
• Government-issued photo ID
• Purchase contract or refinance documentation
• Credit authorization

No tax returns or pay stubs are required for pure asset depletion qualification. If you're combining asset depletion with other income, the documentation for that other income source is added to the package.

Ready to see if your asset position qualifies? Start your application here — share your approximate asset balances and purchase price, and I'll run the depletion calculation and tell you what you qualify for.

Frequently Asked Questions

What is an asset depletion loan?

A loan that converts your liquid assets into qualifying income using a formula — dividing eligible assets by a depletion term to produce a monthly income figure. No job required, no tax return income required. Designed for retirees and high-net-worth borrowers whose wealth is in investments rather than a paycheck.

What assets qualify?

Checking and savings (100%), brokerage accounts (70–100%), retirement accounts (60–70%). Real estate equity is excluded. Assets must be liquid and verifiable, and must have been in the account for at least 60 days.

Do I actually have to deplete the assets?

No. The depletion formula is an income qualification method — not a payment requirement. Your assets stay invested. You make mortgage payments from whatever cash flow you have (returns, Social Security, distributions, etc.).

Can I combine asset depletion with other income?

Yes. Social Security, pension income, annuity distributions, part-time work, and rental income can all be combined with asset depletion income to increase your total qualifying figure.

What is the minimum down payment?

20–30% for primary residences, more for investment properties. The post-close assets (after down payment) still need to support the income calculation — so the lender will verify that enough remains in the account after closing.