Asset Depletion Mortgages In Steamboat Springs — The Quick Read: An asset depletion mortgage turns liquid savings into a qualifying income number instead of using pay stubs or traditional personal-income documentation. A lender divides eligible assets by a set number of months, and that result gets treated like monthly income. You do not spend the money — it stays invested. The math, the eligible asset types, and the divisor used all vary by lender, which is why the same portfolio can qualify for very different loan amounts depending on the program.
Key Takeaways
- Asset depletion converts a balance sheet into a hypothetical income stream — nothing gets liquidated.
- The divisor (the number of months the assets get spread across) is the single biggest lever in the math, and it is not standardized across lenders.
- Real estate equity, business funds, and unvested stock generally don’t count as eligible assets.
- Retirement accounts get discounted more heavily before age 59.5.
- This tool solves a personal-income problem — it’s a different mechanism than a DSCR loan, which is reviewed on a property’s own rental income.
What Asset Depletion Actually Means
An asset depletion mortgage — sometimes called asset amortization underwriting — lets a borrower qualify using liquid net worth instead of traditional personal-income documentation. It’s built for a common situation: high-net-worth borrowers often have low taxable income but a large investment portfolio. Standard debt-to-income underwriting doesn’t handle that mismatch well.
The federal bank regulator has actually written this practice into formal guidance for examiners. That bulletin holds the practice to the same real-estate-lending standards as any other underwriting method. It isn’t a loophole — it’s a documented and regulated approach.
Here’s the part that surprises people: your portfolio doesn’t move. The lender does a documentation exercise on paper. Nothing gets sold, nothing gets withdrawn, and your money keeps compounding right where it sits.
Key Terms Defined
Divisor — the number of months a lender spreads your eligible assets across to produce a monthly qualifying-income figure. A shorter divisor produces a bigger monthly number from the same pool of assets.
Haircut — a discount applied to a non-cash asset before it counts toward qualification. Stocks, retirement accounts, and other market-based holdings typically get reduced rather than counted dollar-for-dollar.
Debt-to-income (DTI) — the share of monthly income a borrower’s total debt payments consume. Asset depletion income gets folded into this calculation just like wages would.
Seasoning — how long funds need to sit in an account, documented on statements, before a lender treats the balance as legitimately the borrower’s own.
Reserves — liquid funds a borrower must show on top of the down payment and closing costs, held as a cushion after closing.
How Underwriting Actually Treats It, Step by Step
The process runs through four steps every time, though the exact numbers change by lender.
Step one: inventory the eligible assets. Fully liquid checking and savings balances typically count close to full value. Market-based holdings get haircut. One published non-QM lender FAQ notes stock, options, and mutual fund balances commonly get counted around 70% of value to account for market swings.
Step two: subtract what isn’t really available. Before any division happens, the file removes the down payment, closing costs, and any required reserves from the asset pool. What’s left is what actually gets divided.
Step three: apply the divisor. This is where programs diverge hardest. A trade explainer notes non-QM divisors commonly land somewhere between 120 and 240 months across the market, while agency guidance for employment-related assets — a different animal entirely — divides by the loan’s own amortization term, meaning 360 months on a standard 30-year loan, per Fannie Mae’s Selling Guide. Agency rules like that one don’t govern DSCR or non-agency investor financing — they’re worth knowing only as a contrast point.
Step four: the output becomes income. Eligible assets divided by the divisor produces a monthly figure. That figure gets treated as income for DTI purposes, whether it stands alone or supplements other documented earnings.
This method skips pay stubs. It skips traditional personal-income documentation. It skips employment verification for this piece of the file. Instead, the lender wants verified statements showing balance and seasoning, proof of ownership, and — for retirement accounts — documentation confirming the borrower’s age relative to penalty-free withdrawal eligibility.
The Structures Available Through Select Lenders
Across the wholesale network Lendmire works with, asset-based qualification runs on two distinct paths, and the difference matters. The OCC Bulletin 2019-36 describes asset depletion underwriting this way: it converts assets into a hypothetical cash annuity. The bank then adds that annuity to any other documented income when it evaluates a borrower’s ability to repay.
The asset allowance path divides liquid assets by 36 months when the resulting income supplements other income and keeps DTI at or below 50%, by 60 months when that supplemental income pushes DTI higher, or by 84 months when the asset income stands alone or the loan amount runs above $3,500,000. This path tops out around 80% loan-to-value and applies to primary residences and second homes only — it isn’t structured for investment property purchases.
The assets-only path works differently: no DTI calculation at all. Instead, the borrower needs U.S.-based liquid assets equal to the full loan amount, plus closing costs, plus 60 months of any net loss carried on other residential property. This is the route for someone whose liquidity genuinely dwarfs the loan size and wants underwriting built entirely around that fact.
On both paths, retirement accounts typically count at 70% of value, stepping up to 80% once the borrower crosses age 59.5 — the point at which withdrawals stop carrying an early-withdrawal penalty. Business funds, gift funds, trusts other than a revocable living trust, unvested stock, and cryptocurrency generally don’t count on either path.
Credit tends to run a 660 floor on standard portfolio files, moving to 700 once a loan crosses the super-jumbo threshold — above roughly $3,500,000 on a primary residence or $3,000,000 on a second home. Reserve requirements typically scale with loan size: 3 months of payments up to $500,000, 6 months up to $1,500,000, and 9 months above that, with additional months layered in per financed property up to a 12-month ceiling for someone building a larger portfolio.
Where the General Rule Breaks
Six spots trip up almost everyone at some point in the process.
Real estate equity never counts. The whole model assumes an asset could theoretically produce monthly liquidity, and property equity can’t do that inside the calculation. A borrower who’s asset-rich mostly through real estate rather than cash or securities is going to hit a wall here — asset depletion isn’t built for that profile.
Young borrowers take a bigger retirement-account hit. Below age 59.5, retirement balances get discounted harder because early withdrawal without penalty isn’t realistic. A 45-year-old with $2 million in a 401(k) sees meaningfully less qualifying credit than a 62-year-old with the identical balance.
Business and LLC-held funds mostly don’t count. Lenders want personal, individually verifiable accounts because ownership and access are cleaner to document. If most of a borrower’s liquidity sits in an entity account, expect scrutiny — or exclusion.
Agency versions restrict occupancy and purpose in ways non-agency programs don’t. Fannie Mae’s employment-related-assets framework only applies to primary and second homes with tighter loan-to-value limits, and only for purchase or rate-and-term refinance transactions, according to a Ribbon Home explainer on how the broader category functions. That’s a narrower box than what non-agency investor programs typically allow.
The divisor tiers by loan purpose and size, not just by lender brand. As shown above, the same lender’s network can apply three different divisors to the same borrower depending on whether the income is standalone or supplemental, and whether the loan crosses a size threshold. Two borrowers with identical portfolios can land on very different qualifying-income numbers purely based on how the loan gets structured.
Freshly deposited funds draw scrutiny. A large balance that shows up right before closing, without a documented history, typically doesn’t count cleanly. Lenders want to see the money seasoned on statements, not appearing out of nowhere the week before underwriting.
Asset Depletion vs. DSCR: Different Tools for Different Problems
A DSCR loan and an asset depletion mortgage solve two completely different qualification problems, and mixing them up costs investors real time. DSCR — debt service coverage ratio — qualifies a loan against the rental income the property itself produces relative to its own payment obligation. It never touches personal income or personal liquidity as the qualifying mechanism. Lendmire’s complete DSCR loans guide walks through that mechanic start to finish.
The two paths intersect in a few real scenarios. Take an investor financing a personal residence with thin tax-return income but a strong portfolio: they might use asset depletion for that purchase while running a DSCR loan on the rental side of the portfolio. Someone might also lean on asset-based qualification just to document reserves or down-payment sourcing, rather than to drive the full income number. And a portfolio investor sitting on appreciated securities sometimes prefers proving liquidity over selling it. Selling triggers capital gains and interrupts compounding. If retirement funds are involved, early withdrawal penalties and taxes chip away even more.
The divisor spread matters enormously here. A shorter divisor on the same asset pool produces a much bigger qualifying-income figure than a longer one does. That’s exactly why the choice between an asset allowance path (36/60/84 months, as outlined above) and a standard agency-style approach can be the difference between comfortably qualifying and not qualifying at all.
For investors weighing a purely rental-income purchase, a second-home or investment property strategy built around asset depletion is worth comparing directly against a DSCR structure before choosing either path.
Sizing and Leverage in Practice
Across the wholesale channel Lendmire’s network runs these files through, loan amounts range from $300,000 to $30,000,000, split across two distinct ladders. A portfolio non-QM program carries files to $6,000,000. A separate bank portfolio program, using twelve months of statements, carries files all the way to $30,000,000 on its own scale: 65% loan-to-value to $5,000,000, 60% to $10,000,000, and 55% up to $30,000,000, with interest-only available at 60% or the band’s own ceiling, whichever is lower.
Leverage on a primary residence steps down as the loan grows — 90% around the $1,000,000 mark, 85% near $2,000,000, 80% near $3,000,000, and 75% at the top credit tier up to $4,000,000. Above $4,000,000, every file gets reviewed case by case before submission rather than sized off a flat table. Second homes and investment properties typically run about five points lower at each size tier than a primary residence does.
Cash-out proceeds run without a stated cap at or below 60% loan-to-value on the portfolio program; above 60%, cash-in-hand is capped at $1,500,000. Reserve math scales with the file, and interest-only structures top out at 85% loan-to-value with a 700 credit floor on the portfolio program, or 60% on the bank program.
Tax treatment on any of this can depend on how funds are used and how title is held — investors should keep clean records and talk with a qualified tax professional before relying on any deduction.
What the Decision Actually Looks Like
Run the comparison honestly before picking a lane.
| Factor | Asset Depletion | DSCR |
|---|---|---|
| Reviewed on | Borrower’s liquid assets | Property’s rental income |
| Occupancy fit | Primary and second homes mainly | Investment / non-owner-occupied |
| Income docs | None — statements instead | None — rent instead |
| Best for | Asset-rich, income-thin borrowers | Rental property purchases and refinances |
If the purchase is a personal residence and the income picture is thin relative to a strong balance sheet, asset depletion is the natural fit. If the purchase is a rental property and the goal is to keep the loan off the borrower’s personal DTI entirely, a DSCR structure is usually the better tool — Lendmire’s DSCR vs. conventional comparison breaks down why that structure exists in the first place.
DSCR loans are designed for non-owner-occupied investment property. Because they are business-purpose loans, they get reviewed differently than a standard owner-occupied mortgage.
If you’re weighing an asset-based purchase against a rental-income structure, Lendmire can help. The team can compare the two options based on your specific portfolio, the property type, and the leverage that fits your goal. Reach the team at 828-256-2183 or request a quote directly.
Frequently Asked Questions
Does asset depletion mean I have to sell my investments?
No. The lender only uses the balance to calculate a hypothetical income figure. Nothing gets liquidated, and the portfolio stays invested exactly as it was before closing.
No — they’re two separately written policies with different eligible-asset lists and different divisors, and neither one governs non-agency investor financing. Non-agency programs, like the ones used for DSCR-adjacent investor purchases, run their own separate math entirely.
Can retirement accounts be used for asset depletion?
Yes, typically at a discount. Balances generally count around 70% of value before age 59.5, rising to around 80% after, since penalty-free access becomes realistic at that age.
Does home equity count as an eligible asset?
Generally, no. The model requires assets that could theoretically produce monthly liquidity, and property equity can’t be drawn that way inside the calculation — a cash-out refinance or DSCR structure solves that problem differently.
Can asset depletion income be combined with a job’s traditional employment income?
Yes, on most files. Asset-based income can supplement other documented income, and the divisor applied often depends on whether the asset income is standalone or supplemental to that other income.
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 non-QM mortgage broker serving real estate investors in 40 markets, including Washington, D.C., through DSCR investor loan programs. Qualification is generally reviewed around the subject property’s rental income, not the borrower’s W-2 history — a practical fit for LLC-titled portfolios and self-employed investors. All scenarios remain subject to lender review and program guidelines. Two consecutive Scotsman Guide Top Mortgage Workplace recognitions (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. Fannie Mae Selling Guide B3-3.4-06
3. Ribbon Home: Asset Depletion Mortgage, What Is It?
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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Important disclosures. Lendmire (NMLS# 2371349) is a licensed mortgage brokerage. Lendmire is not a direct lender, depository institution, or financial advisor. All loan inquiries are subject to lender underwriting; this article does not constitute a commitment to lend. Rates, terms, and program guidelines are subject to change without notice and vary by borrower profile, property type, and state. Information in this article is general in nature and is not financial, legal, or tax advice. Equal Housing Opportunity. NMLS Consumer Access: nmlsconsumeraccess.org.
