Close An Asset Depletion Mortgage — The Quick Read: After a business sale, stock vesting, or inheritance, closing an asset depletion mortgage comes down to five moves: source the funds cleanly, know which assets count and at what discount, subtract what’s already spoken for, run the divisor math, and match the resulting file to the right leverage tier. Most delays trace back to one thing — an unexplained deposit near closing. Get the paper trail right first, and the rest of the file tends to move in order.
What Actually Happens Between “I Have the Money” and “I Have the Loan”
A liquidity event gives you cash, but it doesn’t give you income — at least not the kind a traditional lender recognizes. Asset depletion (sometimes called asset dissipation or asset utilization) converts a balance sheet into a monthly qualifying figure by dividing eligible assets across a set number of months. The Office of the Comptroller of the Currency has described this practice as letting lenders underwrite based on assets rather than employment income, largely for borrowers who are near retirement or otherwise asset-rich and income-light. The same logic applies to someone six months out of a business sale with no new W-2.
Key takeaways before the mechanics:
- Assets never get liquidated to qualify — the calculation is a formula, not a withdrawal.
- Documentation of where the money came from matters more than the size of the balance.
- Different asset types get different haircuts, and different programs use different divisors — this is the single biggest variable in how much you’ll qualify for.
- Loans above roughly $4,000,000 in most wholesale networks move to individual, case-by-case underwriting review before submission.
- A pure rental-property purchase often fits better under a DSCR loan, which is reviewed on the property’s rent instead of your personal balance sheet — worth understanding before you assume asset depletion is the only path.
Step One: Document the Liquidity Event Itself
The file lives or dies on whether the underwriter can trace every dollar back to a legitimate source. A large, unexplained deposit that shows up close to closing with no paper trail is the single most common reason files stall. That rule doesn’t change just because the deposit came from something as legitimate as a business sale.
Different liquidity events carry different documentation needs. A stock sale typically needs brokerage statements, transaction confirmations, and proof the funds landed in your bank account. A business sale is messier — proceeds might arrive as cash at closing, or they might be structured as installment payments, earnouts, seller notes, or consulting agreements, and each of those structures may need its own explanation. Under IRS Publication 537, an installment sale spreads the taxable gain over several years rather than recognizing it all at once — which means the tax return won’t show the full liquidity event in a single year, and the lender will want the closing statement and sale documents to fill that gap.
A sale of a physical asset — real estate, a vehicle, equipment — generally needs proof of prior ownership, an independent valuation, evidence the ownership actually transferred, and proof the proceeds hit your account. Skip any one of those and the underwriter has to treat the deposit as unsourced, which means subtracting it from your asset pool entirely rather than just flagging it. If what’s left doesn’t cover the down payment, closing costs, and required reserves, the file doesn’t move forward as structured.
Step Two: Know Which Assets Count — and at What Discount
Cash sitting in checking, savings, or money-market accounts counts close to full value in most programs. Stocks, bonds, mutual funds, and retirement accounts get discounted, because the underwriter is pricing in market volatility and, for retirement funds, early-withdrawal penalties and tax consequences. Across the wholesale programs Lendmire places files with, retirement accounts commonly count at 70%, stepping up to 80% once the borrower is past 59½ — the age where early-withdrawal penalties disappear. Business funds, unvested stock, cryptocurrency, and gift funds generally don’t count toward the depletion pool at all.
This is where a lot of back-of-envelope math falls apart. An investor looking at a $2,000,000 brokerage account might assume the full balance is fair game. Run it through a 70% haircut and you’re already down to $1,400,000 before the depletion period even gets applied. Multiply that gap across a portfolio with several asset types and the difference between what someone thinks they qualify for and what they actually qualify for can be substantial.
RSU and equity compensation deserves its own mention here, since it often shows up alongside a liquidity event. Vested shares that have already converted to cash and landed in a brokerage account get treated as a standard asset. Unvested RSUs typically don’t count toward asset depletion at all — they’re not liquid, and there’s no guarantee they vest on schedule.
Step Three: Subtract What’s Already Spoken For
Before any division happens, the eligible-asset figure gets reduced by whatever the transaction already needs — down payment, closing costs, and required reserves. Only what’s left after those deductions gets run through the depletion formula. This step trips people up because it happens quietly, buried inside the underwriter’s worksheet rather than spelled out on a rate sheet.
Reserve requirements scale with loan size. Across the programs Lendmire’s network underwrites, expect roughly 3 months of reserves on loans to $500,000, 6 months up to $1,500,000, and 9 months above that — plus 2 additional months per other financed property you own, capped around 12 months total. First-time real estate investors often see reserve requirements set at the higher end of that range regardless of loan size, since there’s no track record of managing a mortgaged property yet.
Step Four: Run the Divisor Math
This is the step that actually produces the qualifying income figure — and it’s also where programs diverge most sharply. The industry has no single standard divisor. Some programs divide by 36 months, some by 60, some by 84, and agency-adjacent products sometimes use the full loan term. The OCC’s bulletin itself acknowledges there’s no federally mandated formula for this — it instructs banks to use a period “similar to other residential mortgages” and to assume conservative or no rate of return, but leaves the exact number up to each institution’s own risk appetite.
Within Lendmire’s wholesale network, an asset allowance path divides liquid assets by 36 months when the loan is supplemental to other qualifying income and overall debt-to-income sits at or below 60%, by 60 months when debt-to-income runs above that, or by 84 months when the asset path stands alone or the loan exceeds $3,500,000. That 84-month standalone option matters most for someone fresh off a liquidity event with no continuing income at all — a shorter divisor produces a bigger monthly qualifying figure, but it’s only available under specific conditions. There’s also an assets-only path with no debt-to-income calculation at all, but it requires liquid U.S. assets equal to the full loan amount plus closing costs plus 60 months of any net loss on other owned residential property — a high bar reserved for genuinely asset-heavy borrowers.
Because the divisor swings so widely across the market, the same $3,000,000 asset pool can produce dramatically different qualifying income depending on which program the file lands in. That’s the whole game in this corner of non-QM lending — it’s less about shopping a rate and more about matching your asset mix and DTI profile to the right divisor.
Step Five: Match the File to a Leverage Tier
Once the qualifying figure is set, the loan amount and property type determine your ceiling. On a primary residence through select wholesale programs, leverage steps down as size climbs: up to 90% on loans from $300,000 to $1,000,000 with a 680+ credit profile, stepping to 85% through $2,000,000, 80% through $3,000,000, and down toward 65% once you’re in the $4,000,000 to $5,000,000 range — all subject to underwriting and never guaranteed at the ceiling figure. Second homes and investment properties run roughly five points lower at comparable sizes, with investment property purchase leverage commonly running 85% at the $1,000,000 entry point and stepping down through the same size bands.
Above $4,000,000, every file in Lendmire’s network moves to individual, case-by-case underwriting before it’s even submitted — the published ladders stop functioning as a simple lookup table at that size. For files that need to go bigger still, a separate bank portfolio program carries 12-month bank-statement files up to $30,000,000 on its own ladder: 65% to $5,000,000, 60% to $10,000,000, and 55% up to $30,000,000, with interest-only capped at 60% or the applicable band’s ceiling, whichever is lower. That program sits alongside — and above $6,000,000, stands entirely apart from — the portfolio non-QM program that tops out at $6,000,000.
Cash-out has its own rules. Unlimited cash-out is generally available at or below 60% loan-to-value on standard rentals; above that, the portfolio program caps cash-in-hand around $1,500,000. Anyone pulling equity for short-term-rental collateral should expect a lower cash-out ceiling around 70%, versus roughly 75% for a standard long-term rental — the two figures move together but never interchange.
Where This Goes Wrong
Files most often stall for three reasons: an unsourced deposit, a mismatch between the borrower’s asset type and the program’s eligible-asset list, and a reserve shortfall that only surfaces after the depletion math is run. None of these are exotic — they’re just easy to miss when someone assumes “I have the money” is the same thing as “I have a qualifying file.”.
In practice, files coming out of a business sale tend to run into the deferred-payment problem more than any other group. Earnouts, seller notes, and consulting-agreement income don’t sit neatly in a bank statement or a divisor formula. They usually need a case-by-case explanation from the underwriter. And the timeline for that review isn’t something a borrower can shortcut by having more cash on hand. Someone whose entire liquidity event closed in a single lump-sum wire has a much simpler file than someone still collecting installment payments from the same transaction.
Across the files this kind of program touches most, a recurring pattern is worth naming: a borrower with a large but recently liquidated asset base often looks stronger on paper than they qualify for on paper, because the haircuts and reserve subtractions eat into the pool before the divisor ever gets applied. The strongest files are the ones where the borrower — or their broker — runs the haircut and reserve math before shopping programs, not after getting a lower number back than expected.
Who This Fits — and Who It Doesn’t
This path fits someone with substantial liquid or near-liquid assets and little or no current income documentation. Think of a founder two months past closing, an executive who just vested a large equity grant, or an heir managing a fresh inheritance. It fits less well for someone whose liquidity event is still tangled up in earnouts or deferred payments. Those structures often need separate underwriting attention, regardless of total asset size.
It’s also worth separating from a different tool entirely: someone buying a rental property, rather than a primary residence, often does better under a DSCR loan, which qualifies primarily on the property’s rental income covering the payment rather than running a personal asset or income calculation at all, subject to lender guidelines. Asset depletion and DSCR solve different problems — one reads your balance sheet, the other reads the property’s cash flow — and using the wrong one after a liquidity event is a common and avoidable misstep. For a closer look at how the two structures diverge on documentation and vesting, see asset depletion vs. a P&L loan. Investors weighing whether the timing of their liquidity event affects which path to take can also review qualifying on asset depletion after a liquidity event for the qualification side of this same question.
Tax treatment of a liquidity event can change a lot. It depends on how you structure the proceeds and how you end up holding the property. Investors should keep clear records. They should also talk to a qualified tax professional before assuming any specific treatment applies to their situation.
This article is for general informational purposes only. It isn’t legal or tax advice. If you’re structuring a loan around a business sale, stock event, or inheritance, talk to a qualified attorney or CPA about your specific circumstances first. Do this before making financial decisions.
Frequently Asked Questions
Do I have to sell or liquidate my investments to use asset depletion? No. The calculation is a qualifying convention, not a withdrawal instruction — the lender divides your eligible asset balance by a set number of months to arrive at a monthly income figure, but the assets themselves stay invested and in your name.
Why did two lenders quote me completely different qualifying income for the same assets? Almost certainly the divisor. One program might divide your eligible assets by 36 months, another by 84 — and that difference alone can change your qualifying income by a wide margin on the identical asset pool. Haircuts on retirement or brokerage assets compound the gap further.
Does a large deposit from my business sale need extra documentation? Yes, and more than most other deposit types. Proceeds from a business sale can arrive as cash, installment payments, earnouts, seller notes, or consulting income, and each structure typically needs its own explanation and paper trail before an underwriter will count it toward your qualifying assets.
Can I combine asset depletion with income from a new job or business? In many wholesale programs, yes — asset depletion can supplement other qualifying income rather than stand alone, and the applicable divisor often depends on your resulting debt-to-income ratio. Programs vary on this, so it’s worth confirming with whoever is structuring the file.
Is asset depletion the right tool if I’m buying a rental property instead of a primary residence? Not always. If the goal is buying investment property, a DSCR loan that is reviewed on the property’s rental income may fit better than running your personal balance sheet through an asset-depletion formula — the two products solve different underwriting problems.
Are you weighing how a recent liquidity event fits into a purchase or refinance? Lendmire can help. We compare asset depletion, bank-statement, and DSCR loan options based on your assets, credit profile, and goals. Reach out to walk through which structure actually fits your file.
For current guidelines and terms, see Lendmire’s super jumbo bank statement loan programs page.
Self-employed borrowers can compare both super jumbo programs on Lendmire’s self-employed mortgages page.
About Lendmire
As a non-QM mortgage broker (NMLS# 2371349), Lendmire facilitates DSCR investor loans across 40 markets, including Washington, D.C. DSCR eligibility is generally reviewed around property-level rental income instead of personal income documentation, subject to lender guidelines, serving LLC-structured portfolios and self-employed borrowers who don’t fit conventional boxes. A two-time Scotsman Guide Top Mortgage Workplace (2025, 2026).
Lendmire’s Top Mortgage Workplace recognition is documented by Scotsman Guide 2025 Top Mortgage Workplace and Scotsman Guide 2026 Top Mortgage Workplace.
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References
1. OCC Bulletin 2019-36 — Lending Standards for Asset Dissipation Underwriting
2. IRS Publication 537 — Installment Sales
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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Compliance and disclosures. Lendmire (NMLS# 2371349) is a licensed mortgage broker and is not a direct lender, depository institution, financial advisor, or tax professional. Content in this article is general market analysis and educational information — not financial, legal, or tax advice for any specific situation. Lendmire does not guarantee loan approval; every transaction is subject to underwriting by the funding lender. Mortgage pricing and loan program guidelines are subject to change at any time without notice and vary by borrower characteristics, property type, and state regulations. Lendmire complies with Equal Housing Opportunity. Licensure verification: NMLS Consumer Access.
