Asset Depletion Loans
Asset depletion (asset utilization) mortgages impute monthly income from liquid assets — brokerage accounts, retirement funds where allowed, and cash — divided over a set number of months. Retirees, trust beneficiaries, and high-net-worth borrowers with modest taxable income often use this path when deposits or W-2s do not reflect spending power.
Conceptual formula
Monthly Income ≈ Eligible Liquid Assets ÷ Depletion Period (months)
Not every asset class counts at full value. Retirement accounts may use a discounted percentage. The depletion period and eligible asset list are lender-specific — your officer quotes the version that fits your statements.
Who fits asset depletion
Borrowers living off portfolio income, recent retirees, or founders who sold a business and live on proceeds may have strong balance sheets and thin current earnings.
Asset depletion is not a shortcut around assets — you still need sufficient liquid reserves after down payment and closing costs.
Eligible vs ineligible assets
Checking, savings, and non-retirement brokerage accounts are typical starting points. Retirement accounts may count at a haircut. Real estate equity, private business interests, and illiquid holdings usually do not count until liquidated and seasoned.
How it compares to bank statement
Bank statement programs follow deposit velocity. Asset depletion follows balance sheet size. Some borrowers qualify both ways — your loan officer models which produces higher usable income.
Occupancy and purpose
Asset depletion appears on primary, second home, and sometimes investment purchases. Cash-out refinances may use the same math when proceeds stay in qualified accounts.
Preparing statements
Provide two months of statements for every account you want considered. Large recent transfers need paper trails. If you are moving funds to qualify, ask about seasoning rules before you shift balances.
Seasoning and large transfers
Assets used for depletion usually need to be seasoned in accounts you can document. Recent sales of a business or inheritance may require a paper trail showing funds landed in qualified accounts and remained there.
Your officer will note which retirement accounts count at full value versus a haircut, and whether annuities or illiquid holdings are excluded entirely.
Asset depletion preparation checklist
Use this checklist as you gather documents. Everything below is free to read and print — no signup required.
- Two months of statements for every account you want considered.
- Documentation for any large recent transfer or liquidation.
- List of accounts to exclude (illiquid holdings, private investments).
- Target depletion period your officer will use in the worksheet.
- Reserves remaining after down payment and closing costs.
- Occupancy and loan purpose: purchase, refinance, or cash-out.
- Comparison note: bank statement income estimate if you also qualify that way.
- Questions about retirement account haircuts before you move funds.
Frequently asked questions
Are non-QM loans the same as subprime mortgages?
No. Modern non-QM products are full-documentation loans underwritten to investor guidelines — they simply use alternative income documentation or property cash flow instead of traditional W-2 tax-return math. Terms, disclosures, and appraisal standards still apply.
Do I need a larger down payment for non-QM?
Down payment expectations vary by program, occupancy, and lender overlay. Investment DSCR files often require more equity than owner-occupied bank statement programs, but exact terms depend on your file. Ask your loan officer for the current matrix after reviewing your scenario.
How long does non-QM underwriting take?
Timelines depend on documentation completeness and third-party turn times (appraisal, title, entity docs for LLC closings). A clean file with organized bank statements or rent schedules typically moves faster than one missing entity documents or incomplete deposit explanations.
Can I combine asset depletion with wage income?
Some lenders allow blended income when you also have W-2 or retirement distributions. Others use asset depletion as the sole income line.
Related guides
Ready for the next step?
Start an application or leave your details — your scenario from this page travels with you.