Asset Depletion Mortgages In Westport — The Quick Read: An asset depletion mortgage lets a borrower qualify using liquid assets instead of pay stubs or traditional personal-income documentation. A lender takes eligible cash, brokerage, and retirement balances, applies a discount to some account types, and divides what’s left by a set number of months to produce a monthly qualifying-income figure. This is an underwriting method, not a separate loan type, and it works the same way whether the property sits in Westport or anywhere else in the country. The mechanics below apply nationally — nothing here is specific to one town’s housing stock.
Key Takeaways
- Asset depletion converts a balance sheet into qualifying income, without selling anything or touching the account.
- The divisor — how many months the balance gets spread across — is the single biggest lever separating one lender’s numbers from another’s.
- Retirement accounts, brokerage holdings, and business proceeds all get treated differently depending on liquidity and access.
- Asset depletion solves a personal-income documentation gap; it does not evaluate a rental property’s own cash flow the way a DSCR loan does.
- Above roughly $3.5 to $4 million, most programs move to full case-by-case review rather than a published grid.
What This Actually Is
Asset depletion is a way to prove you can afford a payment without a job, a K-1, or a steady paycheck. It’s built for people who are wealthy on paper but light on documentable income — retirees, exited founders, and investors living off a portfolio rather than a salary.
Trade coverage of the non-QM market places this group in its own category. Scotsman Guide describes it as a tool that lets “idle brokerage and retirement balances” get converted into attributed income. This helps affluent households — retirees in particular — who want to avoid selling assets just to qualify. A separate Scotsman Guide piece gives a concrete example: a retiree with a $1.5 million investment portfolio can qualify for a loan even without traditional income. That’s the plain-English version of the whole product.
DSCR loans are built for non-owner-occupied investment properties. They are business-purpose investor loans, so lenders review them differently than a standard owner-occupied mortgage. This matters here because asset depletion and DSCR solve two different documentation problems. They are not the same tool.
How Underwriting Actually Treats It, Step By Step
The process is mechanical, and every lender in the space follows some version of the same five steps.
Step 1: Identify eligible assets. Cash, checking and savings balances, brokerage accounts, and retirement holdings generally qualify. Illiquid wealth — private business equity, unvested stock, real estate equity, cryptocurrency in most programs — does not.
Step 2: Apply account-specific discounts. Not every dollar counts the same. Across the wholesale programs Lendmire places files with, retirement accounts typically count at 70%, stepping up to 80% once the borrower has crossed 59.5, the age tied to penalty-free IRS withdrawal access. Volatile or restricted accounts get haircut more than checking and savings for the obvious reason: they can lose value or become harder to reach.
Step 3: Carve out committed funds. Money earmarked for the down payment, closing costs, and post-closing reserves comes out of the pool before anything gets divided. What’s left is the actual qualifying balance.
Step 4: Divide by the program’s divisor. This is where programs genuinely diverge. On the agency side, Fannie Mae’s own Selling Guide provision on employment-related assets spreads the balance across a 360-month term. Freddie Mac’s published approach uses 240 months on a different eligible-asset list. Neither approach governs a non-agency file — they exist here only as contrast, because the shorter a divisor gets, the larger the imputed monthly income becomes from the identical pile of assets.
Step 5: Underwrite the file like any other. Once the imputed income number exists, it flows into the same credit review, reserve check, and documentation process as any other loan file. Asset depletion changes what gets verified, not whether verification happens.
Key Terms Defined
Asset depletion (or asset dissipation): an underwriting method that converts liquid assets into a monthly qualifying-income figure, instead of requiring pay stubs or traditional personal-income documentation.
Divisor: the number of months a lender spreads an asset balance across to calculate monthly qualifying income — a shorter divisor produces a larger monthly figure from the same balance.
Asset allowance: a supplemental qualifying method that adds asset-based income on top of documented income, rather than replacing it entirely.
Assets-only qualification: a path with no debt-to-income calculation at all, used when liquid assets alone cover the loan amount, closing costs, and other carrying obligations.
DSCR (debt-service coverage ratio): the ratio a rental property’s own rent produces against its full monthly obligation — the metric DSCR loans use instead of personal income or assets.
The Structures And Variations That Actually Exist
Asset depletion isn’t one formula — it’s a family of related paths, and the one that fits depends on how much liquidity a borrower has relative to the loan size.
Across the select lenders in Lendmire’s wholesale network, two versions show up most often. An asset allowance path divides liquid assets by 36 months when it’s layered on top of other documented income and the borrower’s overall debt-to-income sits at or below 60%, or by 60 months when that blended ratio runs higher. A standalone asset allowance, or any file above roughly $3.5 million, generally runs on an 84-month divisor instead — a materially longer spread that produces a smaller monthly figure per dollar of assets, which is the tradeoff for using assets as the entire qualifying basis rather than a supplement. Both of these paths are typically available on primary and second homes, generally to 80% loan-to-value, subject to full underwriting.
The other path, assets-only, skips the debt-to-income calculation entirely. It requires the borrower’s U.S.-based liquid assets to equal the loan amount plus closing costs plus, in some cases, sixty months of any net loss the borrower carries on other residential real estate. This is the path for someone sitting on enough liquidity that a debt ratio calculation is almost beside the point.
Leverage on these files steps down as the loan size climbs. On a primary residence, most programs Lendmire places files with run around 90% up to $1 million, 85% up to $2 million, 80% up to $3 million, and 75% at the top credit tier up to $4 million. Everything above that gets reviewed case by case rather than published on a grid. The same is true above roughly $4 million on the portfolio non-QM side. There, a bank portfolio program picks up twelve-month-statement files on its own ladder: generally 65% up to $5 million, 60% up to $10 million, and 55% up to $30 million. Interest-only is capped at 60% or the band’s ceiling, whichever is lower. Second homes and investment properties typically run about five points lower at every size on the leverage side. None of these figures are a commitment to lend. Every file still goes through full underwriting, subject to lender guidelines.
Credit generally needs to clear 660 on the portfolio program floor, higher — closer to 700 — once a file crosses into the super-jumbo range above roughly $3.5 million on a primary home. Debt-to-income can run as high as 50% on files that blend asset income with other documented income. Reserve requirements typically scale with loan size too: commonly 3 months of reserves on smaller files, 6 months into the $1.5 million range, and 9 months above that, plus additional months for each other financed property the borrower carries.
Where The General Rule Breaks
The clean, five-step version above has real edge cases, and missing one of them is where files stall.
Agency math doesn’t transfer to non-agency files. Fannie’s 360-month divisor and Freddie’s 240-month divisor produce dramatically different qualifying income than the shorter 36-, 60-, or 84-month divisors used on the non-agency side. A borrower comparing two “asset depletion” quotes without checking whose divisor applies is comparing numbers that aren’t actually comparable — a mistake documented clearly in the contrast between Fannie Mae’s methodology and Freddie’s shorter timeline.
DSCR loans don’t run this calculation at all. On an investment property purchased with a DSCR loan, the property’s own rent-to-payment ratio drives the decision — not the borrower’s personal balance sheet. Anyone assuming asset depletion will help qualify for a rental purchase is solving the wrong problem; DSCR reads the lease, asset depletion reads the account statements. Lendmire’s complete DSCR loans guide walks through how that property-level qualification actually works, and it’s worth reading before assuming the two products overlap.
Age and access change retirement-account treatment. A 401(k) balance a 45-year-old can’t touch without a penalty gets treated more conservatively than the same balance held by someone past 59.5. This is why the discount schedule on retirement funds isn’t a flat number — it moves with the borrower’s actual ability to reach the money.
Not every asset-depletion loan is non-QM. A lender running a fully documented, compliant asset-based file with agency-style parameters can still land the loan in Qualified Mortgage territory. The label “asset depletion” describes the calculation, not the regulatory wrapper around it.
Illiquid and unvested holdings sit outside every version of this math. Private equity stakes, unvested restricted stock, and real estate equity typically don’t convert into qualifying income under any program — agency or non-agency. If a borrower’s wealth is mostly there, asset depletion won’t be the tool that unlocks it.
The Investor Decision, In Practice
A working investor rarely needs just one of these tools. Most need both, at different points in the same portfolio. The personal home often gets financed using asset depletion. That’s because the borrower’s regular income paperwork can understate their real ability to pay, especially after depreciation, business write-offs, or early retirement. The rental portfolio gets financed on DSCR terms instead. That’s because the properties’ own leases decide what qualifies — not the owner’s balance sheet.
Take an example: a business owner who just exited their company and closed a liquidity event. They may be sitting on a large brokerage balance, but have almost no traditional employment income for the next several years. That balance sheet can support a primary-residence purchase through asset depletion. But the rental duplex that same investor buys next month works differently. Lenders underwrite it based on what the duplex’s rent produces against its own payment. This is a completely separate calculation, and it has nothing to do with the brokerage account.
Are you weighing asset depletion for a personal home against a DSCR structure for an income property? Take a look at Lendmire’s DSCR loans guide to see how the property-level math compares across similar high-net-worth borrower profiles. Tax treatment can depend on how you use the funds and how you hold the property. Keep clear records, and speak with a qualified tax professional before relying on any deduction.
Do you hold most of your wealth in liquid accounts instead of a paycheck? Are you trying to decide whether that balance sheet or a rental property’s own income should drive your next purchase? Lendmire can help you compare the asset-based path and the property-based path side by side. This comparison is based on your specific accounts, the property, and the loan size involved.
Frequently Asked Questions
Does asset depletion mean I have to sell my investments?
No. The balance gets divided on paper to produce a monthly qualifying figure, but the account stays invested and untouched. Nothing is liquidated to qualify — the math is notional, not a withdrawal requirement.
Can I combine asset depletion with my regular income?
Often, yes — the asset allowance path is specifically designed to layer on top of documented income rather than replace it, generally when the borrower’s blended debt-to-income sits at or below 60%. Above that, a longer divisor typically applies. Exact treatment depends on the lender and the file.
Do retirement accounts count the same as a checking account?
No. Retirement funds typically get discounted, commonly counting around 70% of the balance, with a higher allowance around 80% once the borrower is past the age tied to penalty-free access. Checking and savings balances usually count closer to full value, subject to lender guidelines.
Is asset depletion the same thing as a DSCR loan?
No, and they solve different problems. Asset depletion evaluates the borrower’s personal balance sheet for a residential purchase; a DSCR loan evaluates a rental property’s own income against its payment for an investment purchase. They can both fit into the same portfolio, just for different properties.
What happens above roughly $4 million in loan size?
Most programs stop publishing a fixed leverage grid at that point and move to full case-by-case underwriting instead. That doesn’t mean financing isn’t available — it means every detail of the file, from credit to reserves to the specific asset mix, gets reviewed individually before submission.
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. Scotsman Guide — One Out of 20 Mortgages Are Non-QM
2. Fannie Mae Selling Guide B3-3.4-06 — Employment-Related Assets as Qualifying Income
3. getblueprint.io — Fannie Mae Asset Depletion Explainer
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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Required disclosures. Lendmire (NMLS# 2371349) operates as a licensed mortgage broker, not a direct lender or depository. The discussion in this article is general in nature and should not be relied upon as financial, legal, or tax advice — every investment scenario is unique and should be reviewed by a qualified professional. Any loan inquiry is subject to lender underwriting, and this article is not a commitment to lend or a guarantee of approval. Mortgage rates, loan terms, and program guidelines vary by borrower, property, and state, and may change without notice. Equal Housing Opportunity. Verify licensure at NMLS Consumer Access.
