What Is an Asset Depletion Mortgage and How Does It Work?

An asset depletion mortgage lets you qualify for a home loan using your savings, investments, or retirement funds — instead of a traditional paycheck. Lenders take your verified assets, apply a formula, and calculate a monthly “income” amount to see what you qualify for. This is especially helpful for retirees, self-employed buyers, or anyone with significant assets but irregular income.

How Does an Asset Depletion Mortgage Work?

Instead of showing W-2s or pay stubs, you provide proof of assets such as:

• Checking or savings accounts

• Retirement funds (401k, IRA)

• Investment accounts (stocks, bonds, mutual funds)

• Trust accounts

The lender then does a calculation:

1. Add up your total eligible assets.

2. Subtract down payment and closing costs.

3. Divide the remainder by a set number of months (often 240 or the loan term).

4. The result = your “monthly income” for qualification purposes.

📌 Example:
If you have $1,200,000 in verified assets and the lender uses a 240-month formula, your qualifying income is $5,000 per month ($1,200,000 ÷ 240).

Who Benefits Most From Asset Depletion?

This loan option is ideal for:

• Retirees with substantial retirement savings but no paycheck.

• Self-employed professionals with fluctuating income.

• High-net-worth individuals who prefer to qualify based on assets instead of tax returns.

• Investors with money tied up in non-traditional income streams.

Key Advantages

• ✅ No need to prove employment or steady paycheck.

• ✅ Uses assets you already have to unlock home financing.

• ✅ Flexible for unique income situations.

• ✅ Often available for primary residences, second homes, and sometimes investment properties.

Things to Keep in Mind

• Not all assets count. Lenders may discount retirement funds if you’re under 59½.

• Down payment required. You’ll still need to put money down, often 20% or more.

• Not every lender offers it. This is a specialized loan program.

• Rates may vary. Expect them to be slightly higher than standard conventional loans.

FAQs

• Can I use retirement accounts if I’m not retired yet?
  Yes, but lenders may “discount” the value since early withdrawals come with penalties.

• Is an asset depletion loan the same as a no-income loan?
  Not exactly. Lenders still verify your financial strength — they just count assets instead of pay stubs.

• Do I need millions to qualify?
  No. Some borrowers qualify with $300,000–$500,000 in assets, depending on loan size and lender guidelines.

Bottom Line:
If you’re “asset-rich but income-light,” an asset depletion mortgage can help you qualify for a loan using your savings and investments instead of traditional income. It’s a powerful option for retirees, self-employed buyers, and high-net-worth individuals.