Asset depletion mortgages impute monthly income from liquid assets — brokerage accounts, savings, and sometimes retirement funds at a discounted value — divided over a lender-defined depletion period. Retirees, trust beneficiaries, and asset-rich borrowers with modest taxable earnings use this path when deposits or W-2s do not reflect true spending power.
Eligible assets (checking, savings, brokerage) are divided over the loan term to create qualifying income.
Programs vary on which assets count and minimum remaining reserves after closing.
Ideal when tax returns understate true capacity to repay.
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.
Who should compare asset depletion first
Retirees drawing modest taxable income, trust beneficiaries with lump-sum distributions, and founders post-exit often have balance sheets that tell a stronger story than tax returns. Asset depletion is not a shortcut around reserves — you still need liquid assets after closing. Pair this overview with the cluster guide checklist before you move accounts.
Eligible assets and haircuts
Checking, savings, and brokerage accounts are the most common inputs. Retirement accounts may count at a discounted value because early withdrawal penalties and taxes reduce usable balances. Annuities, privately held stock, and real estate equity are often excluded or require separate valuation. Your officer documents which balances qualify and which remain as reserves after the imputed income calculation.
Large recent transfers — business sale proceeds, inheritance, or trust distributions — need a paper trail showing funds landed in qualified accounts and stayed there through application. Moving money between accounts for convenience can trigger re-seasoning questions.
Asset depletion vs bank statement
Bank statement programs follow deposit flow; asset depletion follows balance sheets. Borrowers with steady consulting deposits often win on bank statement. Borrowers living off portfolio draws with minimal W-2 income often win on asset depletion. Some files qualify both ways — model each path before you pay for third-party reports on the wrong program.
Read the full cluster guide for formulas, eligible asset types, and how asset depletion compares to bank statement qualification when you qualify both ways.
Full asset depletion guideAsset 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.
What is asset depletion underwriting?
Asset depletion divides eligible liquid assets by a set number of months to impute monthly income. It fits borrowers whose spending is supported by portfolios or savings rather than current W-2 wages.
Where is the full guide?
The canonical asset depletion cluster guide lives at /asset-depletion-loans with formulas, documentation tips, and comparisons to bank statement programs.