Asset Depletion Loans

An Asset Depletion Loan is a type of Non-QM (Non-Qualified Mortgage) financing that allows borrowers to qualify for a mortgage using their liquid assets—instead of traditional income sources like employment wages or business income. Lenders calculate a stream of income based on the borrower’s total eligible assets and use that figure to determine loan eligibility.

An Asset Depletion Loan provides a financing option for borrowers who may not have regular income but hold significant assets, such as savings, retirement accounts, investment portfolios, or trust funds. Instead of showing pay stubs or tax returns, borrowers demonstrate their ability to repay a loan through the strength and stability of their assets.

This loan type is part of the Non-QM lending category and is commonly used by retirees, high-net-worth individuals, self-employed borrowers with fluctuating income, or those living off investments.

Lenders “deplete” the asset value over a specified period—typically 120 to 360 months—depending on asset type and guidelines. The resulting figure is used as qualifying monthly income.

Why Choose an Asset Depletion Loan?

Traditional mortgages focus heavily on income verification, which can be a challenge for individuals who are asset-rich but cash-flow-light. Asset depletion loans offer a smarter alternative for those whose wealth isn’t tied to regular paychecks.

These loans allow for greater flexibility and recognition of total financial strength, making them an ideal option for borrowers with substantial savings or investments.

What are the Benefits of an Asset Depletion Loan?

Asset Depletion Loans offer many advantages:

• No Income Required: Ideal for borrowers with little or no verifiable income.
• Uses Existing Wealth: Qualify using liquid assets like cash, stocks, retirement accounts, and more.
• Privacy & Simplicity: Skip income documentation, pay stubs, and tax returns.
• Flexible Borrower Profile: Great for retirees, early retirees, and high-net-worth individuals.
• Customizable Terms: Lenders calculate qualifying income based on your specific assets and loan program.

How Does an Asset Depletion Loan Work?

Here’s how a typical Asset Depletion Loan works:

• Asset Review: You provide documentation of your liquid and retirement assets—such as bank statements, brokerage statements, and retirement accounts.
• Calculation: Lenders apply a formula to determine how much income your assets could generate over a set period (e.g., 240 months for retirement assets, 360 for liquid).
• Income Qualification: The resulting monthly “income” is used to determine if you qualify for the mortgage.
• Credit & Property Evaluation: Lenders also review your credit score and appraise the property.
• Loan Approval: If all criteria are met, the loan is approved and you close on your new home or refinance.

Who is an Asset Depletion Loan Best For?

Asset Depletion Loans are perfect for:

• Retirees or early retirees without earned income
• High-net-worth individuals living off investments
• Self-employed borrowers with low taxable income
• Trust fund recipients
• Borrowers with significant savings who prefer privacy

Is an Asset Depletion Loan Right for You?

If you have significant assets but lack traditional income streams, an Asset Depletion Loan offers a flexible path to homeownership or refinancing. By allowing your assets to work for you, this loan structure helps you leverage your financial profile without having to rely on job-related income.