Rate Direct

Retirees, early retirees, and high-net-worth individuals often have substantial assets but limited traditional income. Asset depletion mortgages solve this problem by converting liquid assets into a qualifying income stream for mortgage purposes. If you have significant savings in retirement accounts, brokerage accounts, or other liquid investments, you can qualify for a mortgage without employment income, Social Security, or pension payments.

How Asset Depletion Works

Asset depletion calculates a hypothetical monthly income by dividing your eligible liquid assets by a set number of months (typically 240 or 360, depending on the loan program). For example, if you have $1,200,000 in eligible assets and the lender uses a 360-month calculation, your qualifying monthly income is $3,333. This is used in place of (or in addition to) employment income for DTI calculations. Some lenders use the full value of assets, while others discount certain account types (retirement accounts might be counted at 60-70% to account for taxes on withdrawals). The formula varies by lender and program, making it essential to compare options.

Eligible Asset Types

Most asset depletion programs accept checking and savings accounts at 100% value, investment accounts (stocks, bonds, mutual funds) at 100% value or slightly discounted, retirement accounts (401k, IRA, Roth IRA) at 60-70% of value (to account for early withdrawal penalties and taxes), and vested stock options at a discounted value. Generally not eligible: non-liquid assets like real estate equity, business valuations, personal property, or restricted stock. Some programs accept cryptocurrency at a discounted value, though this is less common. The more conservative the asset type, the less discounting the lender applies.

Conventional Asset Depletion

Fannie Mae and Freddie Mac both allow asset depletion for conventional loans, which means this approach works with standard conforming rates — no non-QM rate premium required. Under Fannie Mae guidelines, eligible assets are divided by the remaining loan term (in months) to produce monthly income. The borrower must have the assets to sustain the income stream for the loan's duration. This is the most cost-effective asset depletion option because it carries conventional interest rates and loan terms. Credit score requirements are the same as any conventional loan (620 minimum, 740+ for best rates).

Non-QM Asset Depletion

For borrowers who do not meet conventional guidelines — perhaps because their assets are primarily in retirement accounts, or they need more flexible underwriting — non-QM asset depletion programs are available. These programs often have more generous asset counting rules, lower reserve requirements, and accept a wider range of asset types. Rates are typically 0.5-1.5% higher than conventional, reflecting the non-QM classification. Loan amounts can reach $5 million or more, making these programs suitable for luxury and high-value property purchases. Check current asset depletion rates on Rate Direct's /asset-qualifying tool.

Qualification Requirements

Beyond the asset threshold, you will need a minimum FICO score of 700-720 (varies by lender), a minimum down payment of 20-30% (since the loan is non-income-based, lenders want more skin in the game), and sufficient assets after the down payment to meet the depletion calculation. Most programs require the assets to be held for at least 60 days (seasoning) to prevent borrowed funds from being used. The property must typically be a primary residence or second home — investment property asset depletion is available but with stricter terms. Reserves of 12-24 months are commonly required on top of the assets used for income qualification.

Planning Strategies

If you are approaching retirement and planning a home purchase or relocation, start consolidating assets into eligible liquid accounts 6-12 months before applying. Move funds from non-liquid investments into brokerage or savings accounts to meet seasoning requirements. Consider the tax implications of using retirement accounts — if the lender discounts your IRA at 70%, Roth IRA funds (which are tax-free on withdrawal) should count at a higher percentage. Diversifying your assets across account types gives you more flexibility. Work with a lender experienced in asset depletion — the underwriting nuances are significant and not all loan officers understand how to structure these deals effectively.