An asset depletion loan converts eligible liquid assets into a monthly qualifying income figure by dividing the usable balance by a set number of months, commonly the loan term or a fixed period such as 60 or 84 months. The result is treated as income for the debt-ratio test, with or without other income sources. Which assets count, how much of each is usable, and the divisor vary by investor.
Who this is for
Retirees living on portfolios, buyers between careers, people who just sold a business, trust beneficiaries, and anyone whose assets outrun their documentable income.
How qualification works
Underwriting inventories your liquid assets: checking and savings at full value, stocks and bonds usually at a haircut, retirement accounts at a further haircut and sometimes only after a certain age. The down payment and closing costs are subtracted. What remains is divided by the program's divisor to produce monthly income. That income, alone or added to Social Security, pension or investment income, goes through a standard debt-ratio calculation.
What I evaluate before it goes to underwriting
- Which accounts the program counts and at what percentage
- Whether retirement funds are usable at your age
- The divisor, which swings qualifying income dramatically between programs
- Whether pairing depletion with actual distribution income produces a better result
- Seasoning and source on any recent large deposits, such as a business sale
What documentation is needed
- Two or three months of statements for every asset account, all pages
- Evidence of any recent large deposit's source, such as a sale agreement or settlement statement
- Award letters for Social Security or pension income if used alongside
- Photo ID; full checklist
Send everything as complete PDFs. Why, and how.
Common underwriting issues
- Assets in accounts titled to a trust or entity without documentation of access
- Retirement funds counted at a lower percentage than expected
- Recent business-sale proceeds without seasoning
- Confusing asset depletion with asset-based qualifying on agency loans, which has narrower rules
Down payment, reserves and pricing
Typically 20% to 30% down. Rates run above agency pricing. Vesting is individual. Primary, second home or investment occupancy depending on program. Reserves are, by definition, part of the qualifying math.
Example scenario
A retired couple relocating from California to Boerne with $1.4 million in brokerage and retirement accounts, Social Security of $4,200 a month, and no other income. After a 30% down payment on a $650,000 home, roughly $1 million of countable assets divided over 84 months adds about $12,000 a month of qualifying income to their Social Security. They qualify comfortably without touching the portfolio.
Common questions
Does asset depletion require me to sell anything?
No. It is a calculation for qualifying purposes. The assets stay invested.
Do retirement accounts count?
Usually at a reduced percentage, and some programs only count them once you are of retirement age.
Can I combine it with Social Security or a pension?
Yes. Most programs allow depletion income to be added to documented income streams.
Sources
Asset depletion programs are private-investor products with no single public guideline; terms are set by each investor's matrix and confirmed on your file. Agency asset-based rules differ: Fannie Mae Selling Guide.
Guidelines are the agencies'; lenders add overlays and change them. Every figure on this page was checked on the review date below and is confirmed again against your file before it goes in a quote.
