ARM and Fixed Terms Work on an Asset Depletion Mortgage Above $2M — The Quick Read: Both structures exist above $2M, but which one a lender offers depends heavily on loan size, documentation path, and how far the file sits above the super-jumbo line. Fixed-rate options exist through roughly $6M on portfolio non-QM programs. Above that, most lenders shift toward adjustable structures, often paired with interest-only periods, and every file over $4M gets reviewed case by case before it’s even submitted.
Asset depletion is an underwriting method, not a separate loan type. A lender takes verified liquid assets, divides them by a set number of months, and uses that figure as imputed monthly income. Once that income number exists, it works the same as any other qualifying income — it supports either a fixed-rate loan or an ARM. The size of the loan and the strength of the asset base decide which structures are on the table above $2M, not the depletion math itself.
Key Terms Defined
Asset depletion (asset dissipation): an underwriting method that converts a borrower’s liquid assets into a monthly income figure by dividing the asset total by a set number of months.
Adjustable-rate mortgage (ARM): a loan with a fixed rate for an initial period, after which the rate resets on a schedule tied to an index plus a margin.
Fixed-rate mortgage: a loan where the rate and payment stay the same for the full term, with no reset.
Index and margin: the index is a market-based benchmark rate that moves over time; the margin is a fixed number of points a lender adds to that index to set the ARM’s rate after the intro period ends.
Rate cap: a limit on how far an ARM’s rate can move at the first adjustment, at each later adjustment, or over the life of the loan.
Interest-only period: a stretch of the loan term, typically the first several years, during which the payment covers interest only and does not reduce the loan balance.
DSCR (debt-service coverage ratio): a ratio used on business-purpose rental loans that compares a property’s rental income to its full monthly payment, rather than qualifying off the borrower’s personal income.
How Asset Depletion Turns a Balance Sheet Into Qualifying Income
Above $2M, most borrowers using asset depletion are retirees, exited founders, or high-net-worth investors. Their traditional income documents often understate what they can really afford. Here’s how the math works: take your liquid assets left after closing — once you’ve set aside the down payment and reserves — and divide that amount by a program-specific divisor.
Two paths show up most often in select wholesale-network guidelines Lendmire places files through. An asset allowance path divides liquid assets by 36 months when supplemental income keeps debt-to-income at or below 60%, by 60 months when supplemental income pushes DTI above that, or by 84 months on a standalone basis or on any loan above $3.5M. This path applies to primary residences and second homes only, up to 80% loan-to-value. An assets-only path skips DTI altogether, but it requires U.S. liquid assets equal to the loan amount plus closing costs, plus 60 months of coverage for any net loss on another residential property.
Retirement accounts count at 70% of value, or 80% once the borrower is 59.5 or older. Business funds, gifts, trusts other than a revocable living trust, unvested stock, and cryptocurrency don’t count toward either path. That’s a meaningful screen for a founder sitting on restricted stock or a crypto position — the depletion math simply ignores it.
Do Fixed-Rate Options Exist Above $2M?
Yes — fixed-rate terms remain available through roughly $6M on portfolio non-QM programs, though leverage steps down hard as the loan size climbs. On a primary residence in select wholesale-network guidelines, purchase and rate-term financing typically run 80% loan-to-value from $2M to $3M with a 720+ credit floor, then step to 75% from $3M to $4M, then down again above that. Every figure above $4M gets reviewed case by case before submission — never treat any leverage number past that point as a flat “up to.”
A separate bank portfolio program carries 12-month bank-statement files as high as $30M on its own ladder: roughly 65% loan-to-value to $5M, 60% to $10M, and 55% up to $30M. That ladder overlaps the portfolio program between $4M and $6M, then stands alone above $6M. On this bank program, fixed-period options run as 5- and 7-year adjustables, or a 10-year fixed-period structure that fully amortizes rather than staying interest-only.
Fixed-rate loans hold the same payment for the full term — there’s no reset to model, which is the whole appeal for a retiree who wants a static, predictable number for as long as they own the home.
How ARM Terms Actually Work on These Files
An ARM holds a fixed rate for an introductory period, then resets on a set schedule tied to an index plus a margin. The Consumer Financial Protection Bureau’s guidance on how this works is direct: the lender sets the index and margin at closing, the margin never changes afterward, and future rate changes come from movement in the index alone (CFPB). Most non-QM ARMs today price off the 30-day average SOFR index rather than older benchmarks.
Structures are labeled by two numbers — years fixed, then adjustment frequency. A 7/6 ARM holds for seven years, then adjusts every six months afterward; a 7/1 holds seven years and adjusts once a year. On the bank portfolio program above $2M, interest-only availability runs to 60% loan-to-value through 5- and 7-year fixed-period adjustables — the 10-year fixed-period version amortizes fully instead of staying interest-only. On the portfolio non-QM program, interest-only reaches up to 85% loan-to-value with a 700 credit floor, structured as a 40-year term with a 10-year interest-only period.
Rate movement on any ARM is bounded by caps — an initial cap limiting the first adjustment, a periodic cap limiting each later move, and a lifetime cap setting the ceiling for the life of the loan. Cap structures vary by program, and this article won’t quote specific figures — pricing and cap details are set by the individual lender and confirmed at application, never published as a blanket number.
What Actually Decides ARM vs. Fixed on a File Above $2M
Three things drive the decision more than borrower preference: documentation depth, reserve strength, and distance above the super-jumbo overlay line.
Your documentation path directly affects the qualifying payment used to size either structure. A 12-month bank-statement file, a 24-month file, and an asset-depletion file each produce a different qualifying income number. That number determines how much leverage a lender will offer on a fixed loan versus an ARM with a lower introductory qualifying payment.
Reserves scale with size. Select wholesale-network guidelines generally require 3 months of reserves to $500,000, 6 months to $1.5M, and 9 months above that — plus 2 months for every other financed property, capped at 12 months total, with first-time investors held to a full 12 months regardless of loan size. Cash-out proceeds can never be used to satisfy that reserve requirement.
Above the super-jumbo overlay line — $3.5M on a primary residence, $3M on a second home or investment property — underwriting tightens meaningfully. Guidelines typically call for a 700 credit floor, a clean 0x30x24 housing payment history, 48 months of seasoning on any credit event, and U.S. citizenship or permanent residency with no non-occupant co-borrowers. Rural property and homes on more than ten acres are excluded outright at this tier. A borrower who clears every one of those boxes has a real shot at a fixed-pricing quote at higher leverage; a borrower who’s thin on reserves or has a recent credit event usually sees ARM-only or lower-leverage terms offered instead.
Investment Property and Second Home Leverage Above $2M
Leverage runs roughly five points lower on second homes and investment properties than on a primary residence at every size band, through select wholesale-network guidelines. From $2M to $2.5M, investment property purchase financing typically tops out near 80% loan-to-value with a 720+ credit floor; from $2.5M to $3M it steps down to roughly 75%; above $3M it drops again, into the 60% range, with every file above $4M reviewed case by case.
| Loan Size | Primary Residence Purchase LTV | Investment/Second Home Purchase LTV |
|---|---|---|
| $2M–$2.5M | ~80% | ~80% |
| $2.5M–$3M | ~80% | ~75% |
| $3M–$3.5M | ~75% | ~60% |
| $3.5M–$4M | ~75% | ~60% |
| $4M–$6M | case-by-case | case-by-case |
A rental loan reviewed this way is different from a normal owner-occupied loan. It’s treated as a business loan, so lenders review it under different rules than a mortgage on your own home. Some borrowers combine asset depletion with a rental portfolio. This lets them qualify a separate property based on its own rental income, instead of their personal assets. A complete DSCR loans guide explains this option in full. It’s worth reading before you assume asset depletion is your only option on a rental purchase.
One practical wrinkle worth flagging: on a business-purpose rental loan qualified by property income rather than personal assets, an ARM reset changes the debt-service side of that coverage math directly. A file that clears comfortably at closing can tighten at the first adjustment if rent hasn’t kept pace — something lenders weighing ARM vs. fixed on larger files model before locking in a structure, not after.
Interest-Only Structures and the Payment Shock Question
Interest-only periods are common on both fixed-period ARMs and the portfolio program’s 40-year fixed-rate structure, which has a 10-year interest-only window. The tradeoff is simple: your payments stay lower during the interest-only years, but your balance doesn’t shrink. Once that period ends, the full principal-and-interest payment kicks in. If you’re combining asset depletion with an interest-only structure, model out your fully amortizing payment before the reset arrives — not after. Lendmire’s asset depletion mortgage interest-only terms coverage breaks down this math in detail.
These files usually need verified bank, brokerage, and retirement account statements, plus a credit report. If the property produces income, you’ll also need a comparable-rent exhibit. Fannie Mae’s Form 1007 rent schedule documents the estimated market rent on a single-family investment property (Fannie Mae). Non-QM lenders often use this same form, even on files that never go through agency underwriting.
Tax treatment of interest-only payments and asset depletion income can vary. It depends on how you use the funds and how the property is titled. Investors should keep clean records and talk to a qualified tax professional before assuming any specific deduction applies.
The Regulatory Backdrop, Briefly
Federal ability-to-repay rules require lenders to check a borrower’s income or assets, current debts, and monthly obligations before extending credit. This rule is what allows assets — not just paychecks — to satisfy the repayment test in the first place. But above roughly $2M, this federal floor stops driving the outcome. Instead, lender overlays on documentation, reserves, and loan size decide whether a file gets offered fixed terms, ARM terms, or both.
Frequently Asked Questions
Can I get a fixed-rate loan on an asset depletion mortgage above $3 million?
Fixed terms remain available on portfolio non-QM programs through roughly $6M, and on a separate bank portfolio ladder up to $30M, though leverage drops as size increases and every file above $4M is reviewed case by case. Whether a specific lender offers fixed pricing at that size depends on credit, reserves, and how far the loan sits above the super-jumbo overlay line.
Does an ARM reset change how my asset depletion income qualifies me?
The imputed income from asset depletion itself doesn’t change at reset — the divisor calculation happens once at origination. What can change is the payment the loan requires, and on any file also using rental-income review framework, a reset can tighten the coverage math directly.
What credit score do I need for an asset depletion mortgage above the super-jumbo line?
Guidelines typically call for a 700 credit floor above the super-jumbo overlay lines — $3.5M on a primary residence and $3M on a second home or investment property — alongside clean housing history and seasoning on any past credit event. Below those thresholds, floors are typically lower, subject to lender guidelines.
Is interest-only available with an ARM on an asset depletion loan?
Yes, through select wholesale-network guidelines. The bank portfolio program offers interest-only through 5- and 7-year fixed-period adjustables up to roughly 60% loan-to-value; the portfolio non-QM program offers a 40-year term with a 10-year interest-only window up to 85% loan-to-value with a 700 credit floor.
Do reserve requirements change based on which structure I choose?
No — reserves scale with loan size and property count, not with whether the loan is fixed or adjustable. Expect roughly 3 months of reserves to $500,000, 6 months to $1.5M, and 9 months above that, plus 2 months for each additional financed property, subject to lender guidelines.
Are you weighing ARM versus fixed on an asset depletion file above $2M? Lendmire can help you compare options across its wholesale network. We’ll look at your asset base, your documentation path, and how leverage and reserves shift at your specific loan size.
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
Lendmire (NMLS# 2371349) is a DSCR-focused mortgage broker that helps arrange investor financing across 40 markets, including Washington, D.C., through wholesale and investor-lending channels. DSCR eligibility is generally reviewed by the lender around the property’s rental income rather than personal income documentation, subject to lender guidelines — which works for self-employed investors, LLC operators, and portfolios above four financed properties. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
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References
1. Fannie Mae — Appraiser Update, June 2024 (Form 1007)
Brandon Miller
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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.
