Who asset depletion loans are for
Some of the most creditworthy borrowers in America fail a standard mortgage application. The retiree with $3 million invested but only Social Security on the tax return. The founder who just sold a business and is living off the proceeds. The early retiree deliberately keeping taxable income low. Traditional underwriting asks what did you earn last year? — and for these borrowers, the honest answer torpedoes the file.
An asset depletion mortgage (also called asset dissipation or asset utilization) flips the question: instead of proving income, you prove assets, and the lender converts those assets into a monthly qualifying income figure using division. You do not actually spend or pledge the assets — the calculation simply demonstrates you could fund the payment for decades.
The math: division, not magic
The core formula is almost embarrassingly simple:
Eligible assets ÷ a fixed number of months = monthly qualifying income
The divisor is usually 240 months (20 years) or 360 months (30 years), depending on the lender and program; a few conservative programs use 120. Smaller divisor, more monthly income per dollar of assets.
A worked example
Say you have $2,000,000 in eligible assets after haircuts and after setting aside your down payment and closing costs. On a 240-month program:
$2,000,000 ÷ 240 = $8,333 per month in qualifying income.
At a 45% debt-to-income ceiling, that supports roughly $8,333 × 45% = $3,750 per month in total debt payments. If your only debts are the new mortgage, taxes, and insurance, that qualifies a substantial loan — from a tax return that might show $30,000 a year. Run the same assets through a 360-month divisor and you get $5,556 per month instead, so the divisor your lender uses matters enormously. Ask before you apply.
What counts, and at what haircut
Not every dollar counts at face value. Lenders discount volatile assets:
| Asset type | Typical credit | Notes |
|---|---|---|
| Cash, checking, savings, CDs | 100% | Full face value |
| Stocks, bonds, mutual funds | 70–80% | Haircut for market volatility |
| Retirement accounts (age 59½+) | 70–100% | Penalty-free access improves the credit |
| Retirement accounts (under 59½) | 60–70% | Discounted for early-withdrawal penalties and taxes |
| Crypto, restricted stock, business accounts | 0–50% | Many lenders exclude entirely |
| Equity in your current home | 0% | Not liquid; does not count |
Two traps hide in this table. First, funds to close come off the top: your down payment, closing costs, and required reserves are subtracted before the division. Second, assets must be seasoned and sourced — typically in your accounts for 60+ days with paper trails for large recent deposits. Moving money between accounts right before applying creates documentation headaches; consolidate early or leave everything where it sits.
Combining assets with other income
Asset depletion income stacks with everything else. A common retiree file looks like: $2,400 per month in Social Security + $1,800 pension + $8,333 asset depletion = $12,533 in total qualifying income. Part-time W-2 work, rental income, and required minimum distributions all combine the same way. This stacking is often the difference between qualifying for the downsized condo and qualifying for the house you actually want.
Who offers asset depletion in 2026
Non-QM lenders are the deep end of the pool: flexible divisors, generous asset lists, and variants that pair asset depletion with interest-only payments to keep the monthly obligation low. Expect a modest rate premium over conventional for the flexibility.
Conventional paths exist too. Fannie Mae guidelines permit qualifying with employment-related retirement assets for borrowers who are retired or near retirement, typically using a 360-month divisor and stricter asset rules. If you are 62+, sitting on a large IRA or 401(k), and want agency pricing, ask your lender to run this option before defaulting to non-QM. The tradeoff: conventional versions are narrower — fewer eligible asset types, tougher documentation — while non-QM versions are broader but cost more.
Asset depletion versus the alternatives
Before committing, sanity-check the neighboring products. If the purchase is a rental property, a DSCR loan may qualify you on the property’s rent with no personal income calculation at all. If you are self-employed with strong deposits but weak tax returns, bank statement loans may produce a higher qualifying income than dividing your assets. And if you own substantial home equity, a cash-out strategy might beat a new purchase loan entirely. The right answer depends on which number — assets, deposits, or rent — tells your strongest story.
Flagged traps
- The divisor is negotiable territory. A 240-month program produces 50% more qualifying income than a 360-month program from identical assets. Shop it.
- Do not drain accounts before closing. Lenders re-verify assets late in the process; a big withdrawal can kill qualifying income at the eleventh hour.
- Market dips matter. Your brokerage statement is snapshot-based. If markets fall between application and underwriting, your eligible assets fall with them — build a cushion.
- Age-restricted conventional options. Some agency retirement-asset paths effectively require you to be near retirement age; non-QM programs generally do not.
Price your Asset depletion scenario in minutes
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