Asset Depletion Mortgages In Kentucky — The Quick Read: Cash, brokerage accounts, and retirement funds can all count toward qualifying income, but each is treated differently — cash usually counts near full value, securities get a haircut for volatility, and retirement funds get discounted more if the borrower is under 59½. Business accounts, unvested stock, and real estate equity generally don’t count. The lender divides the eligible balance by a set number of months to produce a monthly income figure, and that divisor — not the account balance alone — is what moves the coverage figure the most.
Kentucky borrowers looking at asset depletion usually fall into one of two camps. Some are retired or between paychecks and want to buy a primary residence without documenting W-2 or tax-return income. Others are real estate investors whose rental property doesn’t quite clear the coverage a lender wants to see, and they’re hoping their liquid assets can help close the gap. Both paths run through the same basic mechanics — but the details of which assets count, and at what discount, change the outcome dramatically.
Key Terms Defined
Asset depletion (asset dissipation) underwriting — a method where a lender converts a borrower’s liquid assets into a hypothetical monthly income figure, instead of relying on pay stubs or traditional personal-income documentation, described by the OCC’s 2019 guidance on asset dissipation underwriting.
Divisor (depletion term) — the number of months a lender divides the eligible asset balance by to get monthly qualifying income. Programs commonly use terms like 36, 60, or 84 months; a shorter divisor produces a higher monthly income figure from the same balance.
Haircut — a discount applied to certain asset types to account for market volatility or early-withdrawal risk. Cash gets little or no haircut; publicly traded securities and retirement accounts get bigger ones.
Seasoning — the minimum time an asset must sit in a verified account before a lender will count it, meant to rule out funds that just landed from an unverified source.
DSCR (debt service coverage ratio) — on an investment property, the ratio of the property’s rent to its full monthly payment. A ratio at or above 1.00 means rent covers the payment; below that, some lenders in Lendmire’s wholesale network will still consider the file, though leverage and terms adjust accordingly.
Which Assets Count — And At What Value
Not every dollar in a portfolio counts the same way toward qualifying income. Cash-type accounts — checking, savings, money market, CDs — generally count at or near full face value. That’s because they’re already liquid and carry no market risk. Publicly traded securities like stocks, bonds, and mutual funds get discounted for volatility. A common industry treatment counts them at around 80% of value, sometimes less for a concentrated position in a single stock. Retirement accounts split by age. Borrowers at 59½ or older, or already RMD-eligible, typically get a higher percentage of vested value counted. Borrowers under that threshold see a bigger discount, since an early withdrawal would trigger a penalty. Cash-value life insurance is often eligible near full value. Some programs will also consider liquidated cryptocurrency, once it’s converted to cash and deposited into a U.S. institution.
| Asset Type | Typical Treatment |
|---|---|
| Checking, savings, money market, CDs | Counted near full value |
| Publicly traded stocks, bonds, mutual funds | Discounted for volatility |
| Retirement accounts, age 59½+ | Higher percentage of vested value counted |
| Retirement accounts, under 59½ | Larger discount for early-withdrawal risk |
| Cash-value life insurance | Often eligible near full value |
| Business operating accounts | Generally excluded |
| Real estate equity | Generally excluded |
| Unvested stock, private company shares | Generally excluded |
How the Math Actually Works
The formula is simple on paper: eligible assets, after haircuts, get divided by the program’s chosen number of months to produce a monthly qualifying income figure. What’s not simple is that lenders don’t agree on the divisor, and that single choice moves the output more than the balance itself does.
Here’s the mechanical sequence a file actually goes through:
1. Inventory every liquid account — checking, savings, brokerage, retirement, and any other eligible holding gets documented with full statement pages.
2. Apply the asset-specific haircut — cash stays close to full value, securities get a volatility discount, retirement funds get an age-based discount.
3. Carve out funds already spoken for — money needed for the down payment, closing costs, and required reserves comes off the top before the depletion math runs.
4. Divide the remainder by the program’s term — a shorter divisor produces more monthly income from the same pool of assets; a longer one produces less.
5. Layer with other qualifying income, if applicable — some programs let asset-based income stack with Social Security, pension, or part-time wages, depending on the specific guideline set.
On a rental property purchase, asset strength typically supports the file rather than replacing the property-level test. A DSCR loan is reviewed primarily on whether property-level rental income covers the payment, subject to lender guidelines. Liquid assets more often show up as reserves or a compensating factor, rather than as the core income source. Investors comparing the two paths side by side can review the mechanics in Lendmire’s complete DSCR loans guide.
Where the General Rule Breaks
A few situations pull an asset-depletion file off the standard track:
Business funds are broadly excluded from the eligible pool. A borrower can’t point to a business checking balance and expect it to count toward asset depletion the same way a personal brokerage account would — it typically needs separate review, and in most cases it simply doesn’t qualify.
Double-counting isn’t allowed. If an account is already generating interest or dividend income used elsewhere on the application, that same balance generally can’t also be depleted for additional qualifying income.
Recent deposits need seasoning. A lump sum that landed in an account shortly before application — an inheritance, a business sale, a large gift — commonly needs to sit for a minimum period, often cited around 90 days, before a lender will count it at full value. Money that shows up right before underwriting starts tends to draw extra scrutiny and documentation requests.
Concentrated stock positions get a harder look. A portfolio sitting almost entirely in one company’s stock is treated more cautiously than a diversified account, and some guidelines apply an additional discount before running the divisor.
Account ownership has to line up with the loan. Assets sitting in the name of someone who isn’t a borrower, buyer, or owner on the transaction generally don’t count, even if that person is a close relative.
Agency guidelines are quite different from what non-QM programs allow. Fannie Mae’s framework only covers employment-related assets. This might include a documented severance payment or an accessible retirement account. It caps loan-to-value at 70% (or 80% for borrowers 62 and older). It also applies only to primary and second homes, per Fannie Mae’s Selling Guide Section B3-3.4-06. This framework doesn’t extend to non-owner-occupied rental property the way non-QM programs do. That’s one reason investors often look outside conventional lending entirely.
Asset-Based Paths in Lendmire’s Wholesale Network
Across the wholesale programs Lendmire places files with, asset-based qualification isn’t a single product — it’s a menu, and the terms shift depending on how the assets are used.
One path is an asset allowance, where liquid assets are divided by 36 months when used to supplement other income on a file with debt-to-income at or below 60%, by 60 months when supplementing a file above that DTI threshold, or by 84 months when the asset income stands alone or the loan amount runs above $3,500,000. This path is typically limited to primary and second homes, up to 80% loan-to-value, subject to underwriting. Retirement accounts generally count at 70% of value, stepping up to 80% for borrowers 59½ and older. Business funds, gifts, trusts other than a revocable living trust, unvested stock, and cryptocurrency don’t count under this structure.
A second path is assets-only qualification, which drops the DTI calculation entirely. This path requires U.S.-based liquid assets equal to the loan amount plus closing costs. It also requires sixty months of coverage for any net loss on other residential real estate the borrower owns. It’s a heavier liquidity bar. But it removes income documentation from the equation almost completely.
For investors, the more common conversation is a blended one: rental income doing most of the work through a DSCR structure, with liquid assets serving as reserves rather than the primary qualifying source. Some lenders in Lendmire’s network will still consider a file where the property’s coverage ratio falls below 1.00, though loan-to-value and terms adjust to compensate — that’s a program-dependent trade-off, not a guaranteed outcome, and it’s worth comparing against dscr-loan-vs-asset-depletion-loan to see which structure fits a given portfolio.
Sizing and Leverage: What the Numbers Actually Look Like
Loan sizes across Lendmire’s wholesale network for high-net-worth borrowers run from $300,000 up to $30,000,000, split across two program tracks. A portfolio non-QM program carries files to $6,000,000. A separate bank portfolio program, built around twelve months of statements, carries its own ladder above that: 65% loan-to-value to $5,000,000, 60% to $10,000,000, and 55% up to $30,000,000, with interest-only capped at 60% loan-to-value or the band’s ceiling, whichever is lower.
Leverage on a primary residence steps down as the loan gets bigger: around 90% up to $1,000,000, 85% up to $2,000,000, 80% up to $3,000,000, and 75% at the strongest credit tier up to $4,000,000. Above $4,000,000, every file goes through case-by-case review before it’s even submitted — there’s no flat “up to” figure at that size. Second homes and investment properties generally run about five points lower in leverage at every price point along that ladder.
Credit requirements move too. Most of these programs want a 660 floor, stepping up to 700 above the super-jumbo threshold. Reserve requirements scale with loan size — commonly three months of payments up to $500,000, six months up to $1,500,000, and nine months above that, plus additional months for each other financed property an investor already owns.
None of these figures are guarantees. Every file above $4,000,000 gets reviewed individually, and program terms shift based on credit profile, property type, and documentation quality — subject to lender guidelines, and never a commitment to lend.
What This Looks Like in Practice
Picture an investor holding a diversified brokerage account and a 401(k), targeting a rental purchase where the property’s rent runs close to but just under the payment. Instead of trying to force the loan through as a pure asset-depletion file, the stronger structure is usually a DSCR loan sized around the property’s income, with the liquid portfolio documented as reserves. That keeps the loan-to-value and terms in the standard DSCR band rather than pushing the file into a heavier liquidity requirement.
Now compare that to a recently retired professional buying a primary residence with no traditional employment income at all. This person may hold a large brokerage account and an IRA. This borrower fits better with a pure asset-allowance or assets-only structure. Here, the divisor and the retirement-account haircut become the two numbers that matter most.
Documentation discipline separates clean files from stalled ones in both cases. Every page of every account statement typically needs to be included — even the ones marked blank — and any large or unusual deposit needs a paper trail back to its source. Missing pages and unsourced deposits are the most common reason these files sit in underwriting longer than they should.
DSCR loans are a type of business-purpose loan. Lenders review them differently from a standard owner-occupied mortgage, since they aren’t consumer credit transactions in the same sense. Still, all mortgage underwriting — asset-based or otherwise — must follow the ability-to-repay standard under Reg Z. This rule requires lenders to verify repayment ability using reasonably reliable records. You can read a plain-language walkthrough of that rule via Nolo’s explainer on the ability-to-repay rule. Every asset-based program works within this rule, no matter which lender handles the file.
Tax treatment can depend on how the funds are used and how the property is held; investors should keep clear records and speak with a qualified tax professional before relying on any deduction.
Frequently Asked Questions
Do all my liquid assets have to sit in my own name?
Generally yes. Accounts used for asset depletion typically need to belong to a borrower, buyer, or owner of the property being financed — an asset sitting in a non-borrowing relative’s name usually won’t count, even if it’s earmarked for the purchase.
Can inherited money count toward asset depletion?
It can, but it usually needs to season first. A recent inheritance deposited shortly before application may not be counted at full value until it’s sourced and has sat in the account for the lender’s required period, commonly around 90 days.
Does asset depletion replace the DSCR test on a rental property?
No — it typically works alongside the property’s rental income rather than substituting for it. On most investor files, rent still has to cover most or all of the payment; liquid assets more often function as reserves or a supporting factor.
Will I have to actually withdraw and spend my portfolio?
No. The calculation only measures the balance and how accessible it is — it doesn’t require a withdrawal. The portfolio can stay fully invested and continue growing while the lender documents its capacity as income.
Are 401(k) and IRA balances treated the same way?
Not always. Treatment can vary by account type and by the borrower’s age relative to 59½, and different lenders in Lendmire’s network apply different percentages to vested retirement balances, so it’s worth comparing across program guidelines rather than assuming uniform treatment.
Are you buying or refinancing a rental property in Kentucky? Lendmire can help you compare DSCR loan options and see how the numbers work. This comparison factors in the property’s income, your credit profile, available leverage, and your goals as an investor.
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 mortgage brokerage specializing in DSCR investor loans, helping arrange financing across 40 markets, including Washington, D.C., through wholesale and investor-lending channels. The model centers on property-level rental income reviewed by the lender rather than W-2 documentation, subject to lender guidelines, suiting entity-owned and multi-property investors. Lendmire holds Scotsman Guide Top Mortgage Workplace recognition for 2025 and 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, Asset Dissipation Underwriting
2. Fannie Mae Selling Guide B3-3.4-06, Employment Related Assets as Qualifying Income
3. Nolo, Ability-to-Repay Rule Explained
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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- Lendmire LLC · Firm NMLS# 2371349 · Verify firm licensure
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.
