An asset depletion mortgage loan is a unique financing option designed for borrowers with substantial assets but limited income. Unlike traditional mortgage loans, which rely on steady employment income, an asset depletion loan allows lenders to calculate a borrower’s repayment ability based on their liquid assets.
What is an Asset Depletion Mortgage Loan?
This alternative type of home loan is particularly beneficial for retirees, self-employed individuals, high-net-worth individuals, and investors who may not have a traditional income stream but have significant financial resources.
This article will explore how asset depletion mortgage loans work, eligibility criteria, benefits, drawbacks, and lender requirements. It will also include information on how these loans compare to traditional mortgage options and which borrowers may benefit most from this financing strategy.
How Does an Asset Depletion Mortgage Work?
An asset depletion mortgage loan uses a borrower’s liquid assets (such as savings, investments, and retirement funds) to calculate an income equivalent, which is then used to qualify for a mortgage. The lender divides the total eligible assets by a specified term (usually 240 months or 20 years) to determine a monthly income amount.
Calculation Example
If a borrower has $1,000,000 in liquid assets, and the lender applies a 240-month (20-year) division factor, the calculated monthly income is:
This amount is then considered the borrower’s qualifying income, which determines how much they can afford in mortgage payments.
Eligibility Requirements for Asset Depletion Mortgages
Lenders have specific criteria for asset depletion mortgage loans, including:
1. Minimum Asset Requirements
- Borrowers must have sufficient liquid assets to support the loan.
- Some lenders require a minimum of $500,000 to $1,000,000 in assets.
2. Qualifying Asset Types
Only certain assets can be used for income calculation, including:
- Cash in checking and savings accounts
- Stocks, bonds, and mutual funds (subject to a discount factor)
- 401(k) and IRA accounts (some lenders allow only a percentage of retirement accounts to be used)
- Certificates of deposit (CDs)
3. Asset Loan Credit Score Requirements
- Most lenders require a credit score of 680 or higher.
- A higher credit score may result in better interest rates and loan terms.
4. Debt-to-Income Ratio
- The lender will assess the borrower’s total monthly debt obligations, including the estimated mortgage payment.
- Typically, a DTI ratio of 43% or lower is preferred.
5. Property Type Eligibility
- Asset depletion loans are available for primary residences, second homes, and investment properties.
Benefits of Asset Depletion Mortgage Loans
Asset depletion mortgage loans provide numerous advantages for non-traditional borrowers.
1. No Traditional Income Documentation Required
- Unlike conventional loans, pay stubs, W-2s, or tax returns are not necessary.
2. Ideal for Retirees and Investors
- Enables individuals living off investment income or retirement savings to qualify for home financing.
3. Flexible Loan Options
- Borrowers can choose from fixed-rate and adjustable-rate mortgage (ARM) options.
4. Higher Loan Limits
- Many lenders offer jumbo asset depletion loans, allowing borrowers to finance luxury homes and high-value properties.
Drawbacks of Asset Depletion Mortgages
While asset depletion loans provide flexibility, there are some potential downsides.
1. Higher Mortgage Rates
- These asset depletion loans often carry higher interest rates than conventional mortgages due to the perceived higher risk.
2. Limited Lender Availability
- Not all banks and lenders offer asset depletion programs, making it essential to find a specialized mortgage provider.
3. Asset Reduction
- Using liquid assets to qualify for a mortgage may impact long-term financial security and retirement planning.
How Asset Depletion Loans Compare to Traditional Mortgages
| Feature | Asset Depletion Mortgage | Traditional Mortgage |
|---|---|---|
| Income Verification | Based on liquid assets | Requires W-2s, pay stubs, tax returns |
| Credit Score Requirement | 680+ (varies by lender) | 620+ (conventional loans) |
| Down Payment | 20-30% | 3-20% |
| Interest Rates | Higher than traditional loans | Lower for well-qualified borrowers |
| Loan Purpose | Primary, second home, investment property | Typically for primary or second homes |
Best Banks Offering Asset Depletion Mortgages in 2025
Several lenders offer asset depletion mortgage programs. Below are some top options:
1. Bank of America
- Offers jumbo asset depletion loans.
- Requires significant liquid assets.
- Competitive interest rates for high-net-worth borrowers.
Reference: Bank of America. (2025). Jumbo Mortgage Options. Retrieved from https://business.bofa.com/en-us/content/bank-of-america-business-capital-team.html
2. Wells Fargo
- Provides customized mortgage solutions for individuals with high assets but no traditional income.
- Available for primary, second homes, and investment properties.
Reference: Wells Fargo. (2025). Asset-Based Lending Program. Retrieved from https://www.wellsfargo.com/assets/pdf/commercial/insights/business-viewpoints/asset-based-lending-vs-cash-flow-loans-infographic.pdf
How to Apply for an Asset Depletion Mortgage Loan
Step 1: Assess Your Assets
- Identify liquid assets that can be used for income calculation.
- Ensure assets meet minimum lender requirements.
Step 2: Research Lenders
- Compare interest rates, loan terms, and qualification requirements.
- Work with lenders who specialize in asset-based mortgages.
Step 3: Gather Required Documentation
- Bank statements for the past 12-24 months.
- Investment portfolio summary.
- Retirement account statements (if applicable).
Step 4: Get Pre-Approved
- Submit your asset documentation for lender evaluation.
- Pre-approval helps determine loan eligibility and borrowing limits.
Step 5: Finalize Loan Application and Close the Loan
- Complete underwriting and appraisal requirements.
- Sign final loan documents and close on the property.
An asset depletion mortgage loan is an excellent financing option for individuals with high asset wealth but limited traditional income. By converting liquid assets into qualifying income, borrowers can secure financing for primary residences, vacation homes, and investment properties without relying on employment-based income verification.
While higher interest rates and lender restrictions exist, asset depletion loans provide valuable flexibility and financing opportunities for retirees, self-employed individuals, and investors. If you have substantial assets and need a mortgage, exploring asset depletion loan options could be a smart financial move.
Top 5 Reasons Self-Employed Homeowners Love Asset Depletion Loans
For self-employed homeowners, securing a mortgage can be challenging due to fluctuating income and non-traditional pay structures. Asset depletion mortgage loans offer a flexible financing solution, allowing borrowers to qualify based on their liquid assets rather than traditional income documentation. Here are five reasons why self-employed homeowners love asset depletion mortgage loans.
1. No Traditional Income Verification Required
Unlike conventional mortgages that require W-2s, tax returns, and pay stubs, asset depletion loans allow self-employed borrowers to qualify based on their savings, investments, and retirement accounts. This is ideal for entrepreneurs who minimize taxable income through business deductions but still have substantial financial reserves.
2. Higher Loan Approval Chances
Many self-employed individuals face loan rejections due to irregular cash flow. Asset depletion loans increase approval chances by assessing a borrower’s net worth rather than income consistency. This provides financial flexibility for those with significant assets but unconventional earnings.
3. Allows Large Loan Amounts for High-Net-Worth Borrowers
Asset depletion loans are particularly beneficial for high-net-worth individuals seeking jumbo loan financing. By leveraging liquid assets, borrowers can qualify for larger mortgage amounts without the need for extensive income documentation.
4. Flexible Loan Qualification Criteria
Self-employed homeowners benefit from the relaxed underwriting guidelines of asset depletion loans. Lenders calculate monthly income by dividing total assets over a set period (typically 240 months), making it easier to qualify without steady paychecks.
5. Ideal for Retirees and Business Owners
Self-employed retirees and business owners who rely on investment income or capital gains can use an asset depletion mortgage to secure a home loan without proving steady employment income. This enables borrowers to utilize their financial reserves efficiently.
The Asset depletion mortgage loans offer self-employed homeowners a path to homeownership without the hassle of traditional income verification. By focusing on liquid assets rather than earnings, these loans provide greater flexibility, higher approval chances, and access to larger loan amounts. For entrepreneurs, retirees, and investors, asset depletion mortgages are an excellent alternative to conventional home financing options.
About RefiGuide
Bryan Dornan is a financial journalist and currently serves as Chief Editor of RefiGuide.org. Bryan has founded several mortgage and marketing companies and has worked as a loan officer and mortgage broker in the industry for over 25 years and has a wealth of experience in providing mortgage clients with the highest level of service in the industry. Bryan's continual focus is to promote affordable home-ownership to consumers like you across the United States. He also writes for RealtyTimes, Patch, Buzzfeed, Medium and other national publications. Find him on Twitter, Muckrack, and Linkedin
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