Asset Depletion Loans: When You Should (and Shouldn't) Use One

Not everyone's wealth shows up on a pay stub. If your bank statements and investment accounts tell a stronger story than your tax return, a conventional mortgage can undersell what you actually qualify for. That is the exact problem asset depletion loans were built to solve.

Here is how they work, who they are genuinely built for, and when a different loan type is the smarter move.

What Is an Asset Depletion Loan?

An asset depletion loan, also called an asset-utilization or asset-dissipation loan, lets you qualify for a mortgage using your liquid assets instead of a paycheck. Lenders convert your savings, investments, and retirement accounts into an imputed monthly "income" figure, then run that number through standard debt-to-income underwriting.

The formula generally looks like this:

(Eligible Assets − Down Payment − Closing Costs − Reserves) ÷ Depletion Period = Monthly Qualifying Income

The depletion period is the divisor, and it is the single biggest variable between lenders. Agency-style guidelines often divide assets over 360 months. Many non-QM lenders use a much shorter period, sometimes 60 months, which can generate several times more qualifying income from the exact same asset pool. Shopping this program by rate alone misses the point. The depletion period usually matters more.

Which Assets Count, and at What Value

• Checking, savings, and cash: typically counted at 100 percent.
• Brokerage and taxable investment accounts: typically counted at 70 to 80 percent.
• Retirement accounts for borrowers 59½ and older: typically counted at 60 to 80 percent, depending on the lender.
• Retirement accounts for borrowers under 59½: usually counted at a lower percentage to reflect early-withdrawal penalties.
• Real estate equity and business equity: generally not eligible, since they are illiquid until sold or refinanced.

Who Asset Depletion Loans Are Actually Built For

This is a narrow tool for a specific problem: strong balance sheet, weak paper income. It is not a workaround for weak credit or a way to overextend on a home you cannot otherwise afford.

Retirees Living Off a Portfolio

Social Security and a modest pension rarely cover a full mortgage payment on their own, even when a retiree is sitting on a seven-figure portfolio. Asset depletion lets that portfolio count toward qualifying income without forcing an early or unnecessary withdrawal.

Recently Sold Business Owners

Someone who just exited a company often has a large cash position and no current W-2 or 1099 income to show a lender. Asset depletion bridges that gap until a new income source, if any, is established.

Self-Employed Borrowers With Aggressive Write-Offs

Smart tax planning that legitimately minimizes taxable income also minimizes what a conventional lender sees on a 1040. Asset depletion sidesteps the tax return entirely and looks at the balance sheet instead.

High-Net-Worth Buyers Who Do Not Want to Sell Investments

Liquidating a taxable brokerage account to fund a down payment can trigger a real capital gains tax bill and pulls money out of the market permanently. Asset depletion lets the portfolio stay invested and compounding while still counting toward the loan.

Buyers Between Jobs or on a Career Break

A career pause, sabbatical, or gap between roles can derail a conventional approval even when substantial savings are sitting untouched. Asset depletion looks at what you have, not what you are currently earning.

2026 Asset Depletion Loan Requirements at a Glance

• Minimum credit score: typically 680 to 700, with the best pricing reserved for scores above 740 to 780
• Maximum loan-to-value: generally up to 80 percent for a primary residence, though 20 percent down usually unlocks meaningfully better pricing
• Post-closing reserves: typically 6 to 12 months of total housing payments in liquid assets, held separately from the down payment
• Minimum eligible liquid assets: most programs realistically require $500,000 to $1 million or more after down payment, closing costs, and reserves are subtracted
• Loan limits: many non-QM lenders extend up to $5 million to $7 million
• Documentation: two to three months of account statements per asset, no tax returns or W-2s required

Requirements vary meaningfully from lender to lender, which is exactly why working with a specialist rather than a large retail bank tends to produce a materially better outcome for this loan type.

The Real Advantages

• Higher qualifying power. You borrow against actual wealth instead of documented income, which often supports a larger purchase than a conventional loan would allow.
• Your portfolio stays invested. You are not forced to liquidate holdings and trigger capital gains taxes just to buy a home.
• No employment documentation required. There is no W-2, no employment verification call, and no explanation needed for a career gap.

The Real Trade-Offs

• Higher rates. Expect pricing roughly 0.5 to 2 percentage points above a comparable conventional mortgage, reflecting the alternative documentation.
• Larger down payments. Most programs expect 20 percent down or more, well above the minimums available on conventional or government-backed loans.
• Significant reserve requirements. Six to twelve months of housing payments have to sit untouched in liquid accounts after closing.
• Complex, inconsistent underwriting. Every lender applies its own haircuts and depletion period, so two pre-approvals on the same assets can look very different.

Asset Depletion vs. DSCR vs. Bank Statement Loans

These three non-QM programs get confused with each other constantly, but they solve different problems.

Asset Depletion

Best for buyers of a primary residence, second home, or non-income-producing property who have significant liquid assets but limited documented income. Qualification is based on your balance sheet, not the property's cash flow.

DSCR Loans

Built for investment property purchases. Instead of looking at your personal income or assets at all, the lender checks whether the property's rental income covers its own mortgage payment. This is the better fit for investors scaling a rental portfolio, especially those closing in an LLC.

Bank Statement Loans

Designed for self-employed borrowers with strong cash flow but tax returns that understate it. Lenders average 12 to 24 months of bank deposits instead of relying on assets or property income. This is the right tool when your income is real and recurring, just not reflected on a 1040.

When You Should Avoid an Asset Depletion Loan

• Your liquid assets fall well short of the $500,000 range most programs realistically require.
• You would need to spend down reserves immediately after closing, leaving little buffer.
• You qualify comfortably on a conventional loan with your actual documented income, where rates and down payment minimums are more favorable.
• Most of your net worth is tied up in real estate, a business, or restricted equity that cannot be counted as a liquid asset.
• You are buying an investment property, where a DSCR loan will likely qualify you faster and with less personal documentation.

Today's Rate Environment

As of mid-August 2026, the average conventional 30-year fixed mortgage rate is running in the 6.6 percent to 6.7 percent range, with 15-year fixed loans near 6.05 percent, according to Freddie Mac's weekly survey and daily rate trackers. Asset depletion and other non-QM programs typically price a modest premium above those conventional rates. Because pricing and program guidelines shift often, any specific quote should be confirmed directly with a lender before you move forward on an offer.

The Bottom Line

Asset depletion loans exist for one specific borrower profile: strong liquid wealth, weak documented income. If that describes your situation, whether you are retired, recently sold a business, or simply do not want to liquidate a portfolio to buy a home, this program can unlock buying power a conventional lender will never see. If your income already qualifies you comfortably, or your wealth is tied up in illiquid assets, a conventional loan, a bank statement loan, or a DSCR loan will likely serve you better. The right move is to have an honest conversation with a lender who works in all of these programs regularly, so the loan gets matched to your actual financial picture instead of the other way around.