You’ve worked hard to build your wealth! But when it comes time to purchase a 1 to 5-million-dollar home, traditional lenders may not appreciate how your finances actually work. Asset depletion mortgages are the solution!
This loan is designed exactly for someone like you. It calculates a steady income stream directly from your investments. This helps you to leverage your portfolio without liquidating it.
In this article, we’ll uncover exactly how asset-based qualification works. Also, you can find out how to secure a competitive mortgage for your next luxury property.
What Is an Asset Depletion Mortgage?
An asset-depletion mortgage is a home loan that allows you to qualify based on your liquid assets rather than traditional income, such as salary or business earnings.
In this type of loan, instead of proving income through pay stubs, tax returns, or W 2s, the lender calculates a theoretical monthly income based on your assets. For example, you have savings, investments, or retirement accounts. Lenders use these to determine whether you can afford the mortgage. The lender then converts these assets into a monthly qualifying income figure.
A common simplified formula is this:
Monthly qualifying income = total eligible assets / set number of months
Look at this example:
You have $2,400,000 in eligible assets
Divided by 240 months (20 years)
2,400,000÷240=10,000
The lender would treat this as if you have $10,000 in monthly income when evaluating the mortgage application.
How asset depletion differs from traditional mortgages
In the following table, we will compare W 2 / self-employed income underwriting to asset-based underwriting.
| Feature | Asset Depletion Mortgage | Traditional Mortgage |
| Income qualification | Uses liquid assets converted into monthly income | Uses employment income (salary, wages, or business income) |
| Proof of income | Asset statements, such as bank and investment accounts | Pay stubs, W‑2s, tax returns, and employment verification |
| Who it’s designed for | High‑net‑worth individuals, retirees, and investors with large assets but low income | Salaried employees or self‑employed borrowers with stable income |
| Income calculation | Lender divides total eligible assets over a set number of months (often 240–360) | Based on actual monthly income reported on financial documents |
| Asset requirements | Requires substantial liquid assets to qualify | Assets are helpful, but not the primary requirement |
| Common loan type | Often used with jumbo or luxury home loans | Common for standard home purchases |
| Flexibility | More flexible for complex financial profiles | Less flexible if income documentation is irregular |
| Interest rates | Sometimes slightly higher, depending on the lender | Usually, standard market mortgage rates |
Who are good candidates? Why this option appeals to affluent and retired borrowers
Good Candidates for an Asset Depletion Mortgage are:
- Retirees with large savings or investment portfolios
- High net worth individuals with low or irregular income
- Business owners who reinvest profits and show low taxable income
- Investors with substantial liquid assets
- People who recently sold a business or received a large payout
- Borrowers needing jumbo or luxury home financing
These kinds of people may have substantial assets but little regular income. It allows them to qualify using investments, savings, or retirement funds instead of paychecks.
One of the most important pros for them is that they can avoid selling investments or assets just to meet income requirements. Also, it provides flexibility for retirees living off portfolios rather than salaries.
How Asset Depletion Mortgages Work
Here’s a simple visual breakdown of how lenders convert your assets into qualifying income:
The lender typically uses these 4 steps:
- Adds up eligible assets
- Savings accounts
- Brokerage accounts
- Retirement accounts (401k, IRA)
- Cash value of life insurance
- Sometimes trust funds
- Adjusts asset values
- Non-retirement assets: usually counted at 100%
- Retirement assets: often 70–80% counted (because of taxes/penalties)
- Subtracts the down payment and closing costs
- Divide the remaining assets by a set term
Usually 360 months (30 years)
For example, if your assets are like this:
Brokerage: $1,000,000 and Savings: $200,000
Your total eligible assets would be $1,200,000.
Now, if Down payment + reserves are $200,000, the remaining asset will be: $1,000,000
For calculating monthly qualifying income, we use this formula:
1,000,000 ÷ 360 = 2,777
So the lender treats you as if you earn $2,777/month.
They then apply the normal mortgage ratio (DTI) to that number.
Eligible asset types
For an Asset Depletion Mortgage, lenders only count assets that can reasonably be converted to cash. The exact rules vary by lender, but these are the most commonly eligible asset types:
- Cash and Cash Equivalents
If you have highly liquid assets, these are the easiest for lenders to accept. These are typically counted dollar-for-dollar, which means 100%.
For Examples:
- Checking accounts
- Savings accounts
- Money market accounts
- Certificates of deposit (CDs)
- Treasury bills or short-term government securities
- Investment Accounts
Most lenders include brokerage assets but may apply a discount to account for market risk. Keep in mind that some lenders count 100% of the value, while others count 70–90%.
Examples:
- Stocks
- Bonds
- Mutual funds
- ETFs
- Managed brokerage accounts
- Retirement Accounts
Retirement accounts are eligible but discounted because of taxes and early withdrawal penalties. Also, the typical adjustment is 60–80% of the balance used for qualification.
Examples:
- 401(k)
- Traditional IRA
- Roth IRA
- SEP IRA
- SIMPLE IRA
- Pension accounts (if accessible)
- Trust Accounts
If you have access to funds, such as Through Revocable living trusts or certain irrevocable trusts with documented distributions, you are an eligible candidate. Lenders require documentation showing you can legally access the funds.
Assets Usually NOT Allowed
These generally cannot be used for asset depletion calculations:
- Primary residence equity
- Vehicles
- Personal property (jewelry, art)
- Cryptocurrency (some lenders allow limited amounts, but many do not)
- Restricted stock that cannot be sold
- College savings plans (529 plans)
- Real estate equity in properties not being sold
Minimum asset requirements for luxury home price points
Seven-figure home purchases often require high six-figure or seven-figure-eligible assets. Also, you must make a down payment of about 20-30%.
Look at these examples:
$1 Million Home
- Typical down payment: 200k”-” 300k (20–30%)
- Eligible assets needed: about 700k”-” 1M
$2 Million Home
- Typical down payment: 400k”-” 600k
- Eligible assets needed: about 1.5M”-” 2.5M
Common loan sizes and LTVs for luxury home asset depletion loans
As a Luxury buyer, asset depletion usually takes loans in these ranges:
- 750,000 – 1.5M (most common)
- 1.5M – 3M (high end)
- 3M – 5M+ (jumbo & super jumbo asset depletion loans)
Keep in mind that for borrowing under 3M$, there are no special limitations. But if you want to get a mortgage of 3 to 5 million or above, you must have strong assets, credit, and liquidity. Also, a few private lenders go up to 10M-20M+, but requirements increase sharply.
Another key point is that because these loans are higher risk for banks (since they’re not income-based), LTV limits are usually more conservative.
- 70% LTV: most common for $1M+ homes
- 65% LTV: typical for 2M”-” 5M properties
- 60% LTV: common for super jumbo loans ($5M+)
- 50% LTV or lower: private bank or ultra high net worth lending
Qualification Criteria and Documentation, Credit score and credit history expectations
As we said, for jumbo and asset depletion mortgages, lenders usually expect strong credit profiles, since the borrower may not have traditional income. Good credit helps offset that risk.
Common ranges:
- 700+:minimum at many lenders for jumbo or asset depletion loans
- 720–740+: preferred range for better approval chances
- 760+: often needed for the best interest rates
Also, about credit, you must have 2 to 3 years of stable credit history, with no recent bankruptcies or foreclosures. Bankruptcy usually must be 4–7 years old. Foreclosure often takes 7 years.
Also, the lenders check these:
- Low credit utilization on credit cards (preferably under 30%)
- On-time payment history with no recent late payments
- Limited new credit inquiries before applying
- Debt-to-Income ratio (DTI) after converting assets into income
- Liquidity after closing (remaining assets after down payment)
- Mortgage payment history if the borrower owned homes before
How many months of statements are typically required?
Most lenders require 2 months of statements for bank and brokerage accounts. Sometimes, it takes 3–6 months for large loans or stricter underwriting
Remember that the statements must usually show these options:
- Your name on the account
- The account number
- Beginning and ending balances
- Full transaction history
How asset depletion mortgage rates compare to standard jumbo loans
Because you are not qualifying based on traditional employment income, asset-depletion mortgages often have slightly higher interest rates than standard jumbo loans.
The numbers may be about 0.25% to 0.75% higher in many cases. If you have very strong assets, excellent credit (740–760+) and a large down payment, the good news is that the interest rate can be very close to standard jumbo rates.
The stronger your financial profile is, the smaller the pricing difference tends to be.
Advantages and Risks of Asset Depletion Mortgages for Luxury Buyers
| Advantages | Risks |
| Qualify without traditional income (W‑2 or salary) | Interest rates may be slightly higher than standard jumbo loans |
| Ideal for retirees, investors, or asset‑rich borrowers | Requires large liquid asset reserves |
| Allows buyers to keep investments instead of selling them | Market downturns could reduce available assets |
| Can qualify for large luxury home loans | Often requires larger down payments (30–40%) |
| Flexible underwriting compared to traditional mortgages | Fewer lenders offer these loans |
Step-by-Step Process to Get an Asset Depletion Mortgage
In this section, you can find out how to get an Asset Depletion Mortgage in 10 steps:
1. Evaluate Your Assets
First, you should review your liquid assets such as cash, brokerage accounts, and retirement funds. Your qualifying income will be clear for lenders. It’s stronger to have liquid and accessible assets.
2. Check Your Credit Profile
Before applying, check your credit score. A credit score of 700–740+ is considered good for asset depletion loans. Also, ensure your payment history is clean before applying.
3. Choose a Lender Experienced with Asset Depletion Loans
As not all lenders offer this type of mortgage, look for banks or mortgage lenders that specialize in jumbo loans, portfolio loans, or asset-based underwriting.
4. Get Pre-Qualified or Pre-Approved
In this step, the lender reviews your application. They will estimate how much home you can afford using the asset depletion calculation.
5. Submit Asset Documentation
Provide documentation such as:
- Bank statements (usually last 2 months)
- Brokerage account statements
- Retirement account statements (401k, IRA)
- Trust or other asset documentation
6. Asset Depletion Calculation
The lender converts your assets into a qualifying monthly income. Typically, eligible assets are adjusted and then divided over a set period (often 360 months).
For example:
Eligible Assets ÷ 360 = Qualifying Monthly Income
7. Find a Property and Make an Offer
Once pre-approved, you can search for a home within your approved price range and submit an offer.
8. Underwriting Review
In this step, the lender verifies that your assets meet their eligibility requirements.
9. Final Loan Approval
If everything meets the lender’s guidelines, they issue final approval and prepare the loan documents.
10. Closing the Mortgage
You sign the final paperwork, pay the down payment and closing costs (typically 2–5%), and the property ownership transfers to you.
Tips to Improve Your Chances of Approval
- Maintain a Strong Credit Score and aim for 720–740 or higher.
- Keep Assets Liquid and Well Documented because Lenders prefer liquid assets such as cash, brokerage accounts, and retirement funds.
- Lower credit card balances, personal loans, or other liabilities before applying to reduce existing debt.
- A larger down payment can make lenders more comfortable approving the loan. So prepare yourself to face that.
- Maintain Post Closing Reserves. Many lenders want borrowers to have still significant assets remaining after closing (often 12–24 months of mortgage payments or more).
- Avoid Large Unexplained Transfers, especially in the month before applying, because large deposits or transfers in your accounts may require an explanation.
Conclusion
Because asset-based lending requires specialized underwriting and experience, working with the right lender is essential. Mortgage Shop is a trusted lender with deep expertise in asset depletion and other non-traditional mortgage programs. Our team understands the financial structures of high-net-worth borrowers and can help structure a loan that fits your assets, goals, and long-term financial strategy.
If you’re considering buying a luxury home using your assets, the experts at Mortgage Shop can guide you through the process. Call today to receive a free consultation and learn how an asset depletion mortgage could help you qualify for the home you want.
(800) 816-7982
FAQs
What is the minimum asset amount for an asset depletion mortgage on a luxury home?
There is no universal minimum, but most lenders require enough liquid assets to satisfy both (1) the asset depletion income calculation and (2) post-closing reserves.
Can rental income from other properties be combined with asset depletion?
Yes. Many lenders allow rental income to be used alongside asset depletion, provided the rental property is properly documented (lease agreements, tax returns, or rental appraisals, depending on the lender).
Do I need to spend or liquidate my assets to qualify
No. Asset depletion underwriting does not require selling or spending assets. The lender simply uses your assets to calculate a theoretical monthly income.
How long do I need to own the assets before they count?
Most lenders require proof that assets have been seasoned for at least 60 days (typically verified by two months of statements). Larger assets, trust distributions, business proceeds, or lump-sum deposits may require 3–6 months of documentation or a paper trail to prove the source and ownership.
How is DTI (debt-to-income) calculated if income comes from assets?
Lenders simply take your asset-derived monthly qualifying income and use it like normal income in DTI calculations. However, DTI caps are often stricter for asset-only borrowers (commonly 40–43%).
Do lenders treat retirement and non-retirement assets differently?
Yes. Retirement accounts (401 (k), IRA) are usually discounted more heavily due to taxes and withdrawal rules, while non-retirement brokerage accounts may be counted at 70–100% depending on the lender’s policy.
Can I use crypto assets to qualify?
Most lenders do not accept cryptocurrency unless it is converted into cash and held in a bank account for 60+ days. A few specialty lenders may allow very limited crypto exposure, but at heavily discounted rates.
