How is asset depletion income calculated?

Put simply, in the case of an asset depletion mortgage, your qualifying monthly income equals your net eligible assets divided by the depletion period (in months). But there’s an important catch: there is no single universal depletion period. Some programs use the mortgage amortization term. For instance, Fannie Mae has an employment-related asset rule — it calculates monthly qualifying income by dividing net documented assets by the amortization term in months. Other lenders, however, may use much shorter periods under individual conditions. For example, one lender can set a 60-month draw period for an asset-qualifier program while others can easily set 80 and up to 120 months. This difference in depletion periods can change the qualifying income requirements dramatically. For one thing, a shorter depletion period means bigger monthly payments and vice versa. If you divide the same amount of assets by different depletion periods, you will get varying margins, hence the unpredictability of the qualifying income. Seeing how the same borrower with the same assets can fall under radically different qualifying income, we’d recommend you compare lenders. Each asset depletion mortgage framework has its specifics. Also, don’t forget to calculate your mortgage against the total costs (including down payment and all following obligations).

What does “net eligible assets” mean?

Net eligible assets are your eligible assets minus applicable penalties and funds you’ll need for the down payment, closing costs, and required reserves before net documented assets. It’s important to clarify the net eligible assets meaning before applying for an assets depletion mortgage. These are your eligible assets after subtracting items such as: required down payment closing costs required reserves applicable early-withdrawal penalties other amounts that the particular program excludes All the subtractions are as put forth under the Fannie Mae provisions. To make it clearer, suppose you have a $1M-worth investment account that you use for your qualifying monthly income. In that case: Investment account: $1,000,000 Eligible percentage: 70% Eligible value: $700,000 Down payment + closing costs + reserves: $150,000 Now subtract the middle-of-the-road payments (the $150,000) from the eligible value, and get your net eligible assets: $700,000 – $150,000 = $550,000 If the lender sets a depletion period of 120 months, the $550,000 is divided respectively: $550,000 : 120 = $4,583/month Ultimately, this is how you calculate both the qualifying income and net eligible assets.

Is an asset depletion mortgage a non-QM loan?

Sometimes it is, but not necessarily. The loaning format may differ drastically from agency to agency. The thing is, some lenders specifically offer assets depletion mortgages as a non-QM financial service. However, Fannie Mae and Freddie Mac both set forth rules that permit certain assets to be used in loan qualifying. Because of that, many standalone asset-depletion programs are formally Non-QM loans. But asset-based qualification can also be available — if the agency mortgage guidelines allow that and when the loan and assets meet the applicable requirements. Keep in mind, however, that while getting the Qualified Mortgage status is very formal, it’s not completely about sticking to all the formalities. Yes, you should gain the status if you meet the applicable requirements precisely and properly. But the last-line approval and final decision is made by the lender based on a reasonable, good-faith determination of your (borrower’s) ability to repay. This makes thorough preparation for mortgage loans all the more important. In particular, you should use all the chances you get to boost your eligibility potential — e.g., close existing debt, improve credit history, and accumulate reserves.

Should I go for agency asset-based qualification or non-QM asset depletion?

The conventional (or agency-based) approach differs from a non-QM asset depletion mechanism in that you get respective underwriting qualification requirements. For a conventional, aka agency-based approach, Fannie Mae and Freddie Mac have separate regulations under which certain assets can contribute to qualifying your income or repayment capacity. E.g., according to Fannie Mae, you are permitted to qualify income from eligible assets under specific requirements towards your current: LTV/CLTV/HCLTV occupancy loan-purpose access to funds and documentation requirements The standard maximum is 70% LTV/CLTV/HCLTV, which increases to 80% when the asset owner who uses the income is at least 62 years of age, subject to the rule’s conditions. Likewise, Freddie Mac uses its current framework for using assets as a basis for repayment. For non-QM asset depletion, lenders create their own underwriting programs with different: asset types haircut percentages depletion periods minimum assets LTV limits reserve requirements loan amounts credit-score requirements documentation requirements Ultimately, “asset depletion mortgage” doesn’t automatically mean a “non-QM mortgage” per se. Some loan providers describe their asset depletion products as “non-QM, asset-based mortgages”.

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Asset Depletion Mortgage: Using Assets Instead of Income

August 15, 2026

Is Getting a “Mortgage on Savings” for You?

Mortgage is quite a formal procedure — if you want to get a conventional home loan, you must prove your ability to repay the mortgage on paper. Pay stubs, W-2 forms, and tax return forms usually do the trick. But what if you are a retiree or simply cannot provide the standard set of documents? Then you may well fall under a unique category of a borrower.

The category who have “weak repayability” on paper only. Even without a monthly income, your savings’ worth or asset ownership value can be sufficient to qualify for a mortgage. Specifically, you can apply for an asset depletion mortgage, which allows using your long-term investments to back your paying power.

However, it’s not like you’re required to literally spend all of your savings to get an assets depletion mortgage. Let’s figure it out and see whether it’s an alternative befitting your case.

What Is an Assets Depletion Mortgage?

As a standard, mortgage lenders pay the most attention to the regularity and consistency of your (usually monthly) income. Mortgages are normally long-term, so the lenders have all the reasons to prioritize a borrower’s financial reliability.

In an asset depletion mortgage, the lender shifts focus to the wealth you possess, which may be heavily under-reported. They evaluate your lifetime or otherwise accumulated assets to see your repayment ability and qualify you for a loan.

Difference from Conventional Mortgages

In a traditional mortgage, the process of qualifying for a loan is built on underwriting, the main purpose of which is to register exactly the amount of income you receive as a borrower.

Asset-based underwriting, employed in asset depletion mortgages, has a slightly different purpose — it clarifies how much accessible wealth you have, and how long this wealth could support your paying obligations.

That's an important distinction because income and wealth aren't the same thing.

You can become eligible for an assets depletion mortgage in several common scenarios. For instance, as a retired investor or owner of high-worth assets, you might own funds:

in brokerage accounts
in retirement accounts
in real estate
or in relatively little taxable employment income

If any of the above is your case, then demonstrating enough monthly income for a conventional mortgage application may become a major problem for you. In turn, you may still have a strong balance sheet to qualify for an assets depletion mortgage.

Would You Qualify for an Assets Depletion Mortgage?

Given its category-based nature, in order to successfully qualify for an assets depletion mortgage, you must fit one of the following borrower profiles:

Retirees

First and foremost, asset depletion mortgages are open to someone possessing substantial retirement savings, yet relatively modest pension, Social Security, or other recurring income.

When it comes to asset-based qualification, your retirement portfolio is recognized as part of your repayment capacity.

High-net-worth individuals

An asset depletion mortgage fits for when you have up to millions in investments but, again, relatively little traditional income.

In particular, this can the case for:

executives
investors
entrepreneurs
inherited wealth holders
family-office clients
or people living primarily from investments

Self-employed

As a self-employed specialist or business owner, you can also own major assets while showing only a fraction of taxable earnings due to legitimate deductions you may have made.

An assets depletion mortgage in this case is an alternative that can help you qualify without tax returns. Depending on the lender’s program, you may also avoid having to provide other standard income documentation as well.

Investors

A separate category of borrowers, real estate and securities investors, sometimes have complicated income profiles. Their categories of earnings are difficult to process via conventional underwriting.

In turn, asset-based underwriting will count in:

rental income
property depreciation
capital gains
business interests
investment distributions

This gives you room to qualify for a mortgage more on your terms.

Early retirees

It’s common for people to retire at 50-55 or earlier. If you are an early retiree, you may already hold significant investments. But you may still have yet to reach the age at which your retirement distributions or Social Security become sufficient for a mortgage.

Asset-based mortgage qualification can help focus on the assets in hand and bridge this gap.

What Assets Can Be Used?

The main types of assets you can use for an assets depletion mortgage include:

Checking/Savings
Money-market accounts
Stocks
Bonds
Mutual funds
401(k) retirement savings plan
IRA (Individual Retirement Account)
Trust assets
Life insurance cash value

According to Fannie Mae, a borrower must be the sole owner of the asset(s), have fully vested rights for it, and have access to withdraw the funds freely.

Other retirement accounts beyond what’s mentioned above may also apply, with several exceptions, such as:

real estate equity - it’s not liquid in the same way as other common assets and is usually not used for standard asset depletion.
business assets - not many mortgage programs work with business assets, but those that do will set custom restrictions on asset depletion.

The assets that are completely non-eligible for depletion and can’t be used include:

stock options
non-vested restricted stock
lawsuits
lottery winnings
inheritance
divorce proceeds

Importantly, the specific type of asset you can use depends on a loan program you apply for.

Program-Specific Conditions and Asset “Haircuts”

Depending on the mortgage loan program you apply for, different categories of assets and shares of investment portfolio can be considered eligible. E.g., some mortgage programs list 100% for your checking/savings/money-market accounts and 70% for personally held stocks, bonds, mutual funds, and vested retirement assets.

So keep in mind that a lender may not count 100% of your investment or asset portfolio. The amount that’s left out is called a “haircut”, as it’s literally shaved off to protect the lender from market volatility.

Documentation You Will Need for an Asset Depletion Mortgage

Depending on a mortgage program, you may be required to provide:

recent brokerage statements
retirement-account statements
bank statements
evidence of ownership
evidence of vested assets
evidence of asset withdrawal or access rights
documentation of applicable penalties
proof of source of funds
mortgage statement for existing properties
tax returns (in certain programs)
ID and standard mortgage documentation

How LBC Mortgage Can Help You

Still not sure which category do you fit in? LBC Mortgage will save your time and help choose the best-fitting loan type, assist your application, and manage a cost-efficient mortgage cycle. To leverage our specialists’ skills and our platform’s automation — talk to us!

Author:

Alex Shekhtman CEO & Founder, LBC Mortgage

Frequently Asked Questions

1. How is asset depletion income calculated?

Put simply, in the case of an asset depletion mortgage, your qualifying monthly income equals your net eligible assets divided by the depletion period (in months).
But there’s an important catch: there is no single universal depletion period. Some programs use the mortgage amortization term. For instance, Fannie Mae has an employment-related asset rule — it calculates monthly qualifying income by dividing net documented assets by the amortization term in months.
Other lenders, however, may use much shorter periods under individual conditions. For example, one lender can set a 60-month draw period for an asset-qualifier program while others can easily set 80 and up to 120 months.
This difference in depletion periods can change the qualifying income requirements dramatically. For one thing, a shorter depletion period means bigger monthly payments and vice versa. If you divide the same amount of assets by different depletion periods, you will get varying margins, hence the unpredictability of the qualifying income.
Seeing how the same borrower with the same assets can fall under radically different qualifying income, we’d recommend you compare lenders. Each asset depletion mortgage framework has its specifics. Also, don’t forget to calculate your mortgage against the total costs (including down payment and all following obligations).
2. What does “net eligible assets” mean?
Net eligible assets are your eligible assets minus applicable penalties and funds you’ll need for the down payment, closing costs, and required reserves before net documented assets.
It’s important to clarify the net eligible assets meaning before applying for an assets depletion mortgage. These are your eligible assets after subtracting items such as:
- required down payment
- closing costs
- required reserves
- applicable early-withdrawal penalties
- other amounts that the particular program excludes
All the subtractions are as put forth under the Fannie Mae provisions. To make it clearer, suppose you have a $1M-worth investment account that you use for your qualifying monthly income. In that case:
- Investment account: $1,000,000
- Eligible percentage: 70%
- Eligible value: $700,000
- Down payment + closing costs + reserves: $150,000
Now subtract the middle-of-the-road payments (the $150,000) from the eligible value, and get your net eligible assets:
$700,000 – $150,000 = $550,000
If the lender sets a depletion period of 120 months, the $550,000 is divided respectively:
$550,000 : 120 = $4,583/month
Ultimately, this is how you calculate both the qualifying income and net eligible assets.
3. Is an asset depletion mortgage a non-QM loan?

Sometimes it is, but not necessarily. The loaning format may differ drastically from agency to agency.
The thing is, some lenders specifically offer assets depletion mortgages as a non-QM financial service. However, Fannie Mae and Freddie Mac both set forth rules that permit certain assets to be used in loan qualifying.
Because of that, many standalone asset-depletion programs are formally Non-QM loans. But asset-based qualification can also be available — if the agency mortgage guidelines allow that and when the loan and assets meet the applicable requirements.
Keep in mind, however, that while getting the Qualified Mortgage status is very formal, it’s not completely about sticking to all the formalities.
Yes, you should gain the status if you meet the applicable requirements precisely and properly. But the last-line approval and final decision is made by the lender based on a reasonable, good-faith determination of your (borrower’s) ability to repay.
This makes thorough preparation for mortgage loans all the more important. In particular, you should use all the chances you get to boost your eligibility potential — e.g., close existing debt, improve credit history, and accumulate reserves.
4. Should I go for agency asset-based qualification or non-QM asset depletion?
The conventional (or agency-based) approach differs from a non-QM asset depletion mechanism in that you get respective underwriting qualification requirements.
For a conventional, aka agency-based approach, Fannie Mae and Freddie Mac have separate regulations under which certain assets can contribute to qualifying your income or repayment capacity.
E.g., according to Fannie Mae, you are permitted to qualify income from eligible assets under specific requirements towards your current:
- LTV/CLTV/HCLTV
- occupancy
- loan-purpose
- access to funds
- and documentation requirements
The standard maximum is 70% LTV/CLTV/HCLTV, which increases to 80% when the asset owner who uses the income is at least 62 years of age, subject to the rule’s conditions.
Likewise, Freddie Mac uses its current framework for using assets as a basis for repayment.
For non-QM asset depletion, lenders create their own underwriting programs with different:
- asset types
- haircut percentages
- depletion periods
- minimum assets
- LTV limits
- reserve requirements
- loan amounts
- credit-score requirements
- documentation requirements
Ultimately, “asset depletion mortgage” doesn’t automatically mean a “non-QM mortgage” per se. Some loan providers describe their asset depletion products as “non-QM, asset-based mortgages”.

5. How does an asset depletion mortgage differ from a bank statement loan?

An asset depletion mortgage can be similar to a bank statement loan in that it uses your stored financial assets (albeit in different formats). However, these two approaches work in their own ways and have only the words “loan” and “mortgage” in common.

A bank statement loan is issued when a lender narrows down their qualification focus to your in-bank savings, to be exact, your deposits and cash flow (including the history of payments, consistency of “top-ups”, and regularity of financial operations).

An asset depletion model has a broader qualification scope, potentially processing many different forms of income and wealth sources.

But let’s compare them hands-on to make out the difference:

Factor	Asset-depletion mortgage	Bank statement loan
Primary qualification	Assets	Deposits and/or cash flow
Brokerage assets	Often important in such mortgages	Usually secondary here
Retirement assets	Often potentially eligible	Usually not the primary basis
Tax returns	May be less important	Often of reduced importance
The main underwriting question	How much wealth can support repayment?	How much income can deposits demonstrate?
Best suited for	Wealthy borrowers with limited income; retirees	Self-employed mortgage seekers

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