Asset Depletion Mortgages Explained

Asset depletion mortgages let borrowers with substantial savings or investment portfolios qualify for a home loan without showing traditional employment income. Your assets become your income — at least on paper.

Retirees, executives with large investment portfolios, and high-net-worth individuals often face a frustrating paradox: they have millions in liquid assets but can't qualify for a conventional mortgage because their W-2 income is minimal or nonexistent. Asset depletion loans were designed to solve exactly this problem by converting a borrower's assets into a calculated monthly income stream.

In this guide, we'll explain exactly how asset depletion mortgages work, which assets qualify, how lenders calculate the income figure, what loan terms are available, and whether this product is the right fit for your situation.

How Asset Depletion Loans Work

The concept is straightforward: a lender takes your total eligible liquid assets, subtracts the down payment and closing costs, and divides the remaining balance by a set number of months. The result is treated as monthly income for qualification purposes. No job, no W-2, no tax return showing employment income required.

This method reflects a financial reality that traditional mortgage underwriting ignores: a retired borrower with $2 million in a brokerage account is a better credit risk than a salaried employee with $10,000 in savings, even if the retiree shows no employment income. Asset depletion codifies that common-sense logic into a formal underwriting framework.

The loan itself is a standard first-lien mortgage. You get a 30-year fixed, a 15-year fixed, or an ARM — same loan structures as conventional products. The difference is only in how the qualifying income is calculated.

The Asset Depletion Calculation Formula

The exact formula varies by lender, but the most common approach works like this:

Here's a concrete example:

• Total eligible liquid assets: $1,800,000
• Down payment: $300,000
• Estimated closing costs: $15,000
• Remaining assets after costs: $1,485,000
• Divided by 360 months: $4,125/month qualifying income

On a $1,200,000 loan at 7.5%, the monthly PITI might be around $9,000. With $4,125 in asset depletion income plus, say, $3,000 in Social Security, the borrower's total qualifying income is $7,125 — and the debt-to-income ratio is within acceptable limits when factored alongside assets.

Some lenders apply a slightly different formula — using 240 months, using only 70% of retirement account balances, or requiring proof the assets are "seasoned" (in the account for 60–90 days). Always confirm the exact formula with your lender before building your qualification strategy around it.

Which Assets Count?

Not all assets are treated equally. Lenders want liquid, verifiable assets that can realistically be drawn upon. Here's how common asset types are typically treated:

Real estate equity is the most common misunderstanding. Borrowers often assume the equity in their current home can count toward asset depletion — it typically cannot, because real estate is illiquid and would require a sale or cash-out refinance to access. Only assets that can be converted to cash within a short timeframe (typically 3–5 business days) qualify.

Who Is the Ideal Asset Depletion Borrower?

Asset depletion loans are purpose-built for a specific borrower profile. You're likely a strong candidate if:

• You're retired and drawing from investments rather than receiving a paycheck. Social Security and pension income can supplement the asset depletion calculation.
• You sold a business and received a large cash payout but haven't yet established new income streams.
• You're an executive with concentrated equity in vested RSUs or a stock portfolio but your W-2 base salary alone doesn't support the purchase price.
• You're a high-net-worth individual who prefers to keep leveraged real estate rather than liquidate investments to buy properties outright.
• You have inherited wealth or received a large settlement and want to buy a home without relying on employment income.

Asset depletion can also be combined with other income sources. If you have $3,500/month in Social Security plus $2,800/month in asset depletion income, the lender combines those to reach $6,300/month total qualifying income. This combination approach is common and often makes the difference in hitting DTI requirements on larger loan amounts.

If your income challenge is different — say you're self-employed with strong business deposits but low taxable income — a bank statement loan may be a better fit. If you're buying investment property, check out DSCR loans which qualify on rental income with no personal income docs at all.

Requirements and What to Expect

Asset depletion loans are a non-QM product, so requirements vary by lender. General benchmarks as of 2026:

• Credit score: Typically 680+ for best terms; some lenders allow down to 620
• Down payment: 20–30% common; some programs allow 15% on primary residence
• Asset seasoning: 60–90 days in the account, evidenced by statements
• Loan-to-value: Up to 75–80% on primary; 65–70% on investment properties
• Loan size: Most effective on purchase prices above $750,000 where assets generate meaningful qualifying income
• Reserve requirement: Many lenders require 12–24 months of PITI remaining after closing

For documentation, expect to provide 2–3 months of statements for all accounts being used. Retirement accounts may require a recent statement showing vested balance. Some lenders will want to see that you have an established relationship with the financial institution (i.e., the funds aren't a one-time deposit).

Interested in seeing if asset depletion can work for your purchase? Visit our asset depletion loan page for a full overview of our current programs and to get pre-qualified.