ASSET DEPLETION LOANS
Mortgage Qualification Using Eligible Assets
Not every financially strong borrower receives most of their income from a traditional paycheck.
Retirees, business owners and investors may have substantial savings. Yet their tax returns may show too little income to qualify for a mortgage.
An asset depletion mortgage may offer another way to qualify. Some programs use eligible assets to calculate income for the loan review.
We compare asset-based and asset depletion loans from multiple lenders. These options are available to qualified borrowers in Oregon and Washington.
Important Asset Depletion Loan Pricing and Terms
Some asset depletion mortgage programs, particularly non-QM or alternative-documentation loans, may have higher interest rates, more points, or additional fees than loans that use traditional income documentation.
Qualification requirements can also differ, including minimum down payment, credit, cash reserves, eligible assets, and loan terms. Other asset-based qualification options may be available through conventional mortgage programs.
Actual rates, costs, and terms depend on the lender, loan program, property, and borrower qualifications. We can help compare available financing approaches based on your circumstances.
Your Financial Strength May Extend Beyond Monthly Income
Certain mortgage programs may use eligible savings, investments and other qualifying assets to help establish monthly income for underwriting purposes.
What Is an Asset Depletion Mortgage?
An asset depletion mortgage uses eligible assets to calculate income for a home loan. It is also called an asset utilization loan.
The lender applies the program’s formula to a portion of your eligible assets. The result is a monthly income amount used to review your loan.
You do not necessarily have to sell or spend those assets to make mortgage payments.
The lender uses these assets to help assess your ability to repay.
Asset Depletion Programs May Be Available For
Primary Residences
Second Homes
Home Purchases
Rate-and-Term Refinances
Cash-Out Refinances
Available transactions and occupancy types vary by lender and program.
Who May Benefit From an Asset Depletion Loan?
You may have substantial assets but too little income to qualify under standard loan rules. Asset depletion may be worth considering.
May Include
• Retirees
• High-net-worth borrowers
• Investors
• Business owners
Other Financial Profiles
• Borrowers living primarily from savings or investments
• Borrowers with substantial brokerage or retirement accounts
• Individuals transitioning from employment into retirement
• Borrowers whose financial strength isn’t accurately reflected by traditional income documentation
Asset depletion may also help if you already have some income but need more qualifying income for the loan.
How Does Asset Depletion Work?
The exact calculation depends on the loan program.
The lender first identifies which assets qualify for the program. It then applies any required reductions or exclusions. A program-specific formula converts the remaining eligible assets into monthly income used to review the loan.
The Asset Depletion Process
1
Identify Eligible Assets
The lender determines which borrower assets may be eligible under the specific loan program.
2
Apply Adjustments
Required reductions, exclusions or other program-specific adjustments may be applied.
3
Calculate Monthly Income
The lender uses a formula to turn eligible assets into a monthly income amount.
4
Complete Mortgage Review
The calculated income is considered together with the borrower’s overall financial profile and applicable loan requirements.
What Types of Assets May Be Considered?
For example, certain programs may consider eligible funds held in accounts such as:
Bank Accounts
Checking and savings accounts
Money market accounts
Investment Assets
Stocks, bonds and mutual funds
Brokerage accounts
Retirement & Other Assets
Certain retirement accounts
Other eligible liquid or investment assets
Not Every Asset Is Treated the Same
Not all assets count the same way. Some accounts or assets may not qualify.
The calculation may depend on your age, who owns the account, and your access to the funds. The source of the assets also matters. Funds needed for your down payment, closing costs or reserves may affect the amount that counts.
Asset Depletion Loan Requirements
There is no single asset depletion formula or set of requirements that applies to every mortgage program.
Depending on the lender and loan type, underwriting may consider:
✓ Type and amount of eligible assets
✓ Ownership and accessibility of the assets
✓ Funds required for down payment and closing costs
✓ Required cash reserves
✓ Existing income sources
✓ Credit history and credit score
✓ Loan amount
✓ Property type and occupancy
✓ Purchase or refinance transaction
✓ Overall borrower financial profile
Some asset depletion options may be available within traditional mortgage programs, while others may be offered through non-QM or alternative-documentation loan programs.
Warning: A loan using alternative documentation may have higher interest rates, points or fees than a loan using traditional income documentation. This warning applies to alternative-documentation options, rather than every traditional asset-utilization loan.
Asset Depletion vs. Traditional Income Qualification
Traditional Income Qualification
Traditional loan reviews generally use documented income. This may include wages, business earnings, Social Security, pensions or income from investments.
For borrowers with significant assets, those income sources may tell only part of the financial story.
Asset Depletion Qualification
Asset depletion provides another way to evaluate a borrower’s ability to qualify by recognizing eligible assets as a potential source of calculated monthly income.
In some situations, asset depletion may be used alongside other qualifying income rather than replacing it entirely.
The appropriate approach depends on the borrower’s financial profile and the available loan programs.
Asset Depletion vs. Bank Statement Loans
Both programs offer other ways to document income. They use different parts of your finances.
Bank Statement Loan
A bank statement loan generally evaluates eligible deposits and cash flow and is commonly used by self-employed borrowers.
Warning: A loan using alternative documentation may have higher interest rates, points or fees than a loan using traditional income documentation.
Asset Depletion Loan
An asset depletion loan generally focuses on accumulated eligible assets and may be particularly useful for retirees, investors and high-net-worth borrowers.
If you have substantial assets and self-employment income, you may have more than one way to qualify.
Why Lender Selection Matters
Asset depletion guidelines and calculations can vary considerably among lenders.
Lenders may count the same asset differently. Their formulas and rules for reserves, retirement accounts and funds needed to close may also differ.
As an independent mortgage broker, Platinum Lending Solutions can compare programs from multiple lenders. Each lender has its own rules.
How a lender counts your assets can affect your options. We compare those methods along with loan costs and terms.
Asset Depletion Loans in Oregon & Washington
We help Oregon and Washington borrowers compare loans when standard income rules do not fit their finances.
If you have substantial assets but limited documented income, we can review your options. These may include asset depletion, traditional loans, or other income-documentation programs.
Could Your Assets Help You Qualify?
Having significant financial resources doesn’t always translate neatly into traditional mortgage qualifying income.
Tell us a little about your situation and what you’re trying to accomplish. We can review the available mortgage options and determine whether an asset depletion strategy may make sense for you.
Review Your Mortgage Options
We can review your assets, income and mortgage goals to determine which available qualification strategies may be worth considering.
