Asset Depletion Loans: How to Use Your Savings to Qualify for a Mortgage
Learn how asset depletion loans work and how high-net-worth individuals can use investments, retirement accounts, and savings to qualify for a mortgage without traditional income.
NonQM Lending Team
Expert Contributor
What is an Asset Depletion Loan?
An asset depletion loan (also called asset-based or asset dissipation loan) allows borrowers to qualify for a mortgage using their liquid assets instead of traditional employment income. The lender calculates a monthly "income" by dividing your eligible assets by a set number of months.
Who Benefits from Asset Depletion Loans?
Asset depletion loans are ideal for:
- Retirees with significant savings but limited pension income
- High-net-worth individuals who live off investments
- Business owners who reinvest profits into their companies
- Trust fund beneficiaries with asset access
- Recently retired professionals transitioning from employment
How Asset Depletion Income is Calculated
The Basic Formula
Monthly Income = Eligible Assets ÷ Amortization Period
Most lenders use 360 months (30 years) as the divisor, though some use 240 or 120 months.
Example Calculation
| Asset Type | Value | Eligible % | Eligible Amount |
|---|---|---|---|
| Checking/Savings | $200,000 | 100% | $200,000 |
| Stocks/Bonds | $500,000 | 100% | $500,000 |
| 401(k)/IRA | $800,000 | 60-70% | $520,000 |
| **Total Eligible** | **$1,220,000** |
Monthly Income: $1,220,000 ÷ 360 = $3,389/month
Eligible Asset Types
100% Eligible Assets
- Checking and savings accounts
- Money market accounts
- Stocks and bonds
- Mutual funds
- CDs (Certificates of Deposit)
Partially Eligible Assets (60-70%)
- 401(k) accounts
- Traditional IRA
- Roth IRA
- SEP-IRA
- Pension accounts
The discount accounts for taxes and early withdrawal penalties.
Generally Not Eligible
- Real estate equity
- Business ownership value
- Cryptocurrency (some lenders)
- Restricted stock
- Life insurance cash value (varies)
Asset Depletion Loan Requirements
Minimum Asset Requirements
- Most lenders require:
- $500,000 - $1,000,000 minimum eligible assets
- Assets must be liquid and accessible
- Assets must be in borrower's name or joint account
Credit Score Requirements
| Credit Score | Max LTV | Notes |
|---|---|---|
| 740+ | 80% | Best terms |
| 700-739 | 75% | Standard |
| 660-699 | 70% | Higher rates |
| 620-659 | 65% | Limited options |
Documentation Required
- 2 months of asset statements
- Verification of account ownership
- Explanation of large deposits
- Standard mortgage documents
Advantages of Asset Depletion Loans
1. No Employment Required
Perfect for retirees or those who don't work traditional jobs.
2. No Tax Returns Needed
Many asset depletion programs don't require tax return review.
3. Preserve Your Assets
You're not required to actually spend down your assets—they just need to exist.
4. Competitive Rates
Rates are often comparable to conventional loans for well-qualified borrowers.
Strategies to Maximize Qualification
1. Consolidate Accounts
Having assets in fewer accounts makes documentation easier.
2. Convert to Eligible Assets
If you have assets in ineligible forms, consider converting them before applying.
3. Time Your Application
Apply when your accounts are at their highest values (avoid market dips).
4. Combine with Other Income
Asset depletion income can be combined with Social Security, pension, or other income sources.
Asset Depletion vs. Other Options
| Feature | Asset Depletion | Bank Statement | Conventional |
|---|---|---|---|
| Income Source | Assets | Deposits | W-2/Tax Returns |
| Best For | Retirees, HNW | Self-Employed | Employees |
| Min Assets | $500K+ | N/A | N/A |
| Tax Returns | Usually No | No | Yes |
| Rates | Competitive | Higher | Lowest |
Frequently Asked Questions
Do I have to spend my assets?
No. The calculation is theoretical—you keep your assets and they continue to grow.
Can I use retirement accounts if I'm under 59½?
Yes, but lenders typically only count 60-70% due to early withdrawal penalties.
What if my assets decrease after closing?
Once the loan closes, changes in your asset values don't affect your mortgage.
Can I combine asset depletion with rental income?
Yes, many lenders allow you to combine multiple income sources.
Get Started
Have significant assets but non-traditional income? Connect with lenders who specialize in asset depletion loans.