An asset depletion loan is a mortgage option that lets a lender use your liquid assets—rather than traditional employment income—to help qualify you for a home loan. It is commonly used by retirees, high-net-worth borrowers, self-employed borrowers, or people with significant savings but limited taxable income.

Instead of relying mainly on W-2 wages or standard income documents, the lender reviews eligible assets and calculates a monthly “income equivalent” from them. That calculated amount can then be used in your debt-to-income ratio.

Common eligible assets may include:

* Checking and savings accounts
* Brokerage accounts
* Retirement accounts, such as IRAs or 401(k)s
* Money market accounts
* Stocks, bonds, or mutual funds
* Trust assets, if accessible and documented

How it generally works:

* The lender verifies your eligible asset balances.
* Certain assets may be discounted, especially retirement or investment accounts.
* The lender divides the usable asset amount over a set period, often based on loan term or program guidelines.
* That monthly figure is treated like income for qualifying purposes.

For example, if a borrower has substantial liquid assets but little monthly income on paper, an asset depletion loan may help show they have the financial capacity to make the mortgage payment.

Important things to know:

* You usually still need acceptable credit, sufficient assets, and a reasonable down payment.
* Not all assets count the same way.
* Retirement assets may need to be accessible, and some programs only count a percentage of the balance.
* Documentation requirements can vary by loan type and lender.
* These loans are often considered non-traditional or non-QM, though some conventional guidelines may allow asset-based income in certain cases.

An asset depletion loan can be a good fit for someone who has built wealth but does not show enough regular income on tax returns or pay stubs. The key is having the right mix of verifiable assets, credit strength, and overall loan profile.

# What Is an Asset Depletion Loan?

An asset depletion loan is a type of mortgage that qualifies you based on your **liquid assets** rather than your traditional employment income. It’s designed for borrowers who have significant savings, investments, or retirement funds but limited or irregular monthly income – think retirees, early retirees, or high-net-worth individuals living off their portfolios.

## How It Works

Instead of looking at pay stubs or tax returns, the lender calculates a hypothetical monthly income by “depleting” your eligible assets over a set period (often 60, 120, or 240 months, depending on the program).

**Simple example:** If you have $1,200,000 in eligible assets and the lender uses a 120-month formula, that translates to roughly $10,000/month of qualifying income for the loan application.

## What Counts as Eligible Assets

Lenders typically allow:
– Checking and savings accounts (often 100%)
– Stocks, bonds, mutual funds (typically 70-80% of value)
– Retirement accounts like IRAs and 401(k)s (often 60-70%, with adjustments based on age and whether you can access funds penalty-free)

Real estate equity, business assets, and restricted stock usually don’t count.

## Who It’s a Good Fit For

– Retirees with strong nest eggs but modest reported income
– Self-employed borrowers whose tax returns don’t reflect their wealth
– Investors living off portfolio gains
– Anyone “asset-rich, income-light”

## What to Expect

– **Credit score:** Generally 660-700 minimum, depending on the program
– **Down payment:** Typically 20-30% for a primary residence
– **Loan type:** This is a **non-QM** (non-qualified mortgage) product, so rates and fees are usually a bit higher than a conventional loan
– **Documentation:** Recent statements (usually 2-3 months) for all asset accounts you’re using to qualify

Asset depletion can also be **combined** with other income sources (Social Security, pensions, part-time work) to strengthen your application.

It’s a flexible solution when traditional income docs don’t tell your full financial story.

An asset depletion loan is a type of mortgage that allows borrowers to qualify based on their liquid wealth rather than traditional employment income. Instead of looking at pay stubs, W-2s, or tax returns, lenders calculate a qualifying monthly income by dividing your total eligible assets over a set period of time.

This program is designed to show that you have enough cash reserves to comfortably cover your mortgage payments, even without a standard salary. To calculate your income, a lender will typically take your total eligible assets and divide them by a specific timeframe—often the life of the loan (such as 360 months) or sometimes a shorter period like 60 to 84 months.

Lenders generally accept a variety of liquid assets for this calculation, including:
* **Cash accounts:** Checking, savings, and money market accounts.
* **Investment accounts:** Stocks, bonds, and mutual funds.
* **Retirement accounts:** IRAs and 401(k)s. (Note: If you are not yet of retirement age, lenders typically only count a percentage of these funds—often 60% to 70%—to account for taxes and early withdrawal penalties).

Asset depletion loans are an excellent solution for several types of buyers:
* **Retirees** who no longer receive a regular paycheck but have substantial retirement savings.
* **High-net-worth individuals** who live off investments and show low taxable income.
* **Self-employed borrowers** who keep their wealth in personal accounts rather than paying themselves a high W-2 salary.

Because these fall under the category of Non-QM (Non-Qualified Mortgage) loans, they generally carry different requirements than conventional loans. Borrowers typically need a larger down payment—often 20% or more—and strong credit, usually requiring a minimum credit score in the 680 to 700 range.