Asset Depletion Mortgages In Iowa — The Quick Read: Asset depletion turns liquid savings, brokerage holdings, and retirement accounts into a monthly qualifying income figure instead of pay stubs or traditional personal-income documentation. Cash counts in full, retirement accounts get discounted, and real estate equity, business funds, and most trusts never count at all. The divisor a lender picks — anywhere from 36 months to 360 months — changes the coverage figure more than the account balance does. Iowa borrowers work with the same underwriting logic used everywhere else in the country; no state law changes which assets qualify.
What Asset Depletion Actually Solves
Asset depletion exists for borrowers whose bank balance tells a better story than their tax return. Take a retired professional, a business owner who writes off heavily, or an investor living off portfolio income. Each of these borrowers often shows thin taxable income even while sitting on significant liquid wealth. A conventional lender reading a 1040 sees almost nothing to qualify on. An asset depletion program reads the brokerage statement instead. It converts the balance into an imputed monthly income figure.
Bank regulators recognize this as a legitimate underwriting method, not a workaround. The OCC Bulletin 2019-36 names the practice “asset dissipation underwriting” and confirms banks may use it. But banks must document a written policy covering which assets qualify, what discount applies, and how the annuity-style income gets calculated. The bulletin doesn’t hand down a required formula. That detail matters. It’s the reason two lenders can look at the same brokerage statement and come up with two different qualifying numbers.
DSCR loans are designed for non-owner-occupied investment properties. Because they are business-purpose investor loans, lenders review them differently from a standard owner-occupied mortgage. Asset depletion typically applies on the personal-income side rather than the property side. Say an investor buys a rental that doesn’t cash flow well enough to clear a straight rent-versus-payment test. That investor may still lean on personal assets or reserves, depending on the file. Lendmire’s complete DSCR loans guide covers how property-level qualification works when the rent itself — not the borrower’s balance sheet — is the basis for underwriting.
Key Terms Defined
Asset dissipation underwriting — the formal regulatory term for converting a borrower’s liquid assets into a hypothetical monthly income stream used in place of, or alongside, traditional income documentation.
Depletion divisor — the number of months a lender divides eligible assets by to produce the monthly qualifying income figure; shorter divisors produce higher monthly income from the same asset pool.
Asset haircut (or discount) — the percentage reduction applied to a given asset type before it enters the depletion calculation, usually applied to volatile or restricted holdings like retirement accounts.
Seasoning — the length of time an asset must have been held in a documented, verifiable account before a lender will count it toward qualification.
Borrower-alignment rule — the requirement that any account counted toward qualification belong to a borrower on the loan, not a non-borrowing spouse or third party.
How the Calculation Actually Works, Step by Step
The mechanics are consistent across the non-QM market even when the numbers aren’t. Four moves happen in order.
First, the lender inventories eligible liquid assets: checking, savings, money market, CDs, brokerage accounts, and vested retirement funds. Second, the lender applies a discount by asset type. Cash usually holds full value, while volatile or restricted holdings take a haircut. Third, the lender subtracts whatever is needed for the down payment, closing costs, and required reserves. That leaves only the assets that are actually free to be counted. Fourth, the lender divides that remaining balance by the program’s depletion period, expressed in months. This produces a monthly income figure that flows into the debt-to-income calculation the same way a salary would.
The divisor is the single variable that moves the outcome most. Trade coverage of published non-QM guidelines shows real divisors clustering well below the long agency timelines. Some programs divide by 60 months, others by 84 months, versus the far longer horizons used in agency-style calculations. A shorter divisor produces a bigger monthly number from the same pool of assets. That’s not a loophole. It’s simply a policy choice, and each lender’s written guidelines are required to spell it out under the OCC bulletin.
Through select lenders in Lendmire’s wholesale network, the asset-based paths work two ways, and the difference between them matters more than most borrowers realize. An asset allowance path divides liquid assets by 36 months when it’s supplementing other income and the debt-to-income ratio sits at or below 60%, by 60 months when supplementing income above that DTI threshold, or by 84 months when it stands alone or the loan amount runs above $3,500,000 — available on primary residences and second homes only, up to 80% loan-to-value. An assets-only path skips the debt-to-income calculation entirely: it requires U.S.-based liquid assets equal to the loan amount, plus closing costs, plus sixty months of any net loss carried on other residential property. That’s a materially higher liquidity bar, but it removes income ratios from the conversation altogether.
Which Assets Count — and at What Value
The clearest way to see this is a table, because every asset class gets treated differently.
| Asset Type | Typical Treatment | Why |
|---|---|---|
| Cash, savings, CDs, money market | Counted at full value | Fully liquid, no volatility |
| Brokerage / taxable investments | Discounted | Market and tax exposure |
| Retirement accounts (401k, IRA) | 70% of vested balance, 80% at age 59½ or older | Early-withdrawal penalty and tax drag |
| Real estate equity | Never counted | Illiquid; can’t fund a monthly payment |
| Business operating accounts | Never counted | Already tied to business income used elsewhere |
| Gifted funds | Never counted | Not the borrower’s earned or invested capital |
| Cryptocurrency | Never counted | Volatility and custody concerns |
| Unvested stock, restricted units | Never counted | Not yet the borrower’s asset |
| Irrevocable trusts | Never counted | Borrower lacks sufficient control |
| Revocable living trust assets | Can count | Borrower retains full control |
These figures reflect typical treatment through select lenders in the wholesale network Lendmire works with. They’re not a universal industry rule — every file still runs through underwriting on its own facts. Retirement accounts count at 70% of the vested balance. That rate steps up to 80% once the account holder is 59½ or older, which lines up with when penalty-free access typically becomes available. Business funds, gifted money, trusts other than a revocable living trust, unvested stock, and cryptocurrency never count on these programs, no matter how large the balance is.
One detail borrowers consistently get wrong: nobody has to actually sell anything. The number is hypothetical. A lender is modeling what a portfolio could produce as income, not requiring the borrower to liquidate a CD or cash out a stock position to close the loan.
Where the General Rule Breaks
A few edge cases trip up borrowers who read one lender’s guidelines and assume they apply everywhere.
The age-62 myth. A common misread is that Freddie Mac requires a borrower to be 62 before assets can count as income. Under the current Freddie Mac Single-Family Seller/Servicer Guide, Section 5307.1, that condition attaches only to depository and securities accounts — retirement assets carry no age requirement at all, only vesting, sole ownership, and penalty-free access. That’s an agency rule for owner-occupied conforming loans, and it doesn’t govern non-QM or DSCR files, but it’s worth knowing because so much borrower-facing content repeats the age-62 claim as if it were universal.
Freddie Mac just changed its own divisor. Under Bulletin 2026-10, Freddie Mac cut its asset-depletion divisor from 240 months down to 180 months, dropped the age-62 requirement for depository and securities accounts, and expanded eligibility to include investment properties alongside primary and second homes, effective for settlements on or after February 3, 2027. That’s a meaningful shift in the agency world, but it’s a conforming-loan rule — it has no bearing on how a non-QM or DSCR file gets underwritten, and the divisors used across select wholesale programs run considerably shorter than even Freddie’s revised 180-month figure.
Sale-of-business proceeds get their own paper trail. Freddie’s guide treats proceeds from selling a borrower’s own business as a distinct category, requiring the most recent three months of account statements, the fully executed closing documents, the sale contract, and the last business tax return filed before the sale. Non-QM programs generally want similar proof — dated documentation connecting the deposit to the sale, not just a large balance appearing out of nowhere.
Double-dipping is off the table. Interest, dividends, or capital gains generated by an account can’t be counted as income in addition to that same account being used in the asset-depletion calculation. Pick one use for the asset, not both.
The CFPB’s Ability-to-Repay/Qualified Mortgage rule is the reason assets can substitute for income at all on consumer-purpose loans — it requires third-party-verifiable evidence of income or assets. That framework generally governs owner-occupied lending; a DSCR loan made to a business-purpose borrower for a rental property typically sits outside that consumer-credit scope, which is part of why DSCR underwriting focuses on the property’s rent rather than the borrower’s personal balance sheet.
Sizing and Leverage Through the Wholesale Network
Loan sizes on the programs Lendmire places files with run from $300,000 up to $30,000,000 across two overlapping wholesale ladders. A portfolio non-QM bank-statement program carries files to $6,000,000. A separate bank-portfolio program, using twelve months of statements, carries files on its own ladder up to $30,000,000: 65% at or below $5,000,000, 60% at or below $10,000,000, and 55% up to $30,000,000, with interest-only capped at 60% or the band’s ceiling, whichever is lower. That bank-portfolio ladder begins above $4,000,000 and overlaps the portfolio program through $6,000,000; above $6,000,000 it stands alone.
Leverage on a primary residence steps down as the loan size climbs: 90% up to $1,000,000, 85% up to $2,000,000, 80% up to $3,000,000, and 75% at the top credit tier up to $4,000,000, with everything above $4,000,000 reviewed case by case before submission — never a flat “up to” figure at that size. Second homes and investment properties run roughly five points lower at every size band on these ladders.
On the income side, most files run on 12 or 24 consecutive months of bank statements, with personal transfers from the borrower’s own business counted at full value. Credit sits on a 660 floor on the portfolio program, stepping up to 700 above the super-jumbo threshold. Debt-to-income can run as high as 50% on many files. Reserve requirements scale with loan size: typically three months of reserves up to $500,000, six months up to $1,500,000, and nine months above that, plus two additional months for each other financed property the borrower carries, up to a twelve-month ceiling.
None of these figures are guaranteed terms — every file is underwritten individually, and the numbers above reflect typical treatment on the programs Lendmire’s wholesale network works with, subject to full underwriting.
Combining Asset Depletion With Other Income
Most files aren’t pure asset-depletion files. A retiree drawing Social Security, a part-time consultant with modest 1099 income, or an investor collecting rental cash flow can often layer that income alongside an asset-based calculation rather than choosing one method exclusively. The asset allowance path is explicitly built for this — it’s meant to supplement other documented income, not always replace it, which is why the 36-month and 60-month divisors are tied to debt-to-income thresholds rather than standing alone. The 84-month divisor is the one reserved for files where assets are doing the entire job, or where the loan amount runs above $3,500,000.
An investor eyeing a rental purchase where the DSCR ratio comes in a little light on rent alone should think of asset depletion and DSCR as two separate levers, not competing products. A short overview like Lendmire’s DSCR loan vs. asset depletion loan breakdown lays out when one mechanism fits better than the other, since they answer genuinely different underwriting questions — one qualifies the borrower’s personal balance sheet, the other qualifies the property’s own cash flow.
A Note on State Availability
Iowa isn’t part of Lendmire’s 16-state footprint for retail consumer mortgage lending. That footprint currently covers Alabama, California, Colorado, Florida, Georgia, Indiana, Michigan, Montana, New Mexico, North Carolina, Ohio, Pennsylvania, Tennessee, Texas, Virginia, and Washington. It applies specifically to owner-occupied consumer lending. Business-purpose DSCR investor loans work differently. They’re a separate platform arranged through select lenders across a much wider 40-market footprint, including Washington, D.C. Asset depletion mechanics don’t change by state. The divisor, the haircuts, and the eligible-asset list are program-level decisions, not state-law questions. But which loan product a borrower can actually get still depends on where the property and the borrower sit relative to that footprint.
Frequently Asked Questions
Do I have to actually spend down my assets to qualify? No. The income figure is hypothetical — a lender is modeling what the assets could produce over the depletion period, not requiring a sale, withdrawal, or liquidation before closing.
Can my spouse’s assets count if they aren’t on the loan? Generally no. Most programs apply a borrower-alignment rule, meaning only accounts belonging to a borrower on the loan can be counted toward the depletion calculation.
What happens if the market drops after I’ve been approved but before closing? Because valuations and discounts are typically locked based on statements pulled during underwriting, a short-term dip usually doesn’t reopen the file, but a lender can require updated statements if enough time passes between approval and closing.
Does cryptocurrency ever count? On the programs Lendmire’s network works with, no — cryptocurrency is treated as an ineligible asset regardless of balance, consistent with how most non-QM guidelines handle it today.
Can asset depletion be used for an investment property instead of a primary residence? The asset allowance path Lendmire’s network uses is limited to primary residences and second homes, not investment properties; investors buying rentals more commonly qualify through a DSCR structure focused on the property’s own rental income instead. Tax treatment can depend on how the funds are used and how the property is held, so investors should keep clear records and speak with a qualified tax professional before relying on any deduction.
If you’re weighing whether an asset-based path or a property-income path fits your next purchase, Lendmire can help you compare options based on your liquid assets, credit profile, leverage target, and the specific property you’re financing.
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.
Get Started
Ready to find the right loan for you?
In about 30 seconds you can review financing options available for your home or investment property. No commitment required.
Informational only. Not a Loan Estimate, approval, or commitment to lend. Program availability and eligibility are subject to lender guidelines, credit approval, property review, and underwriting.
References
2. Freddie Mac Single-Family Seller/Servicer Guide, Section 5307.1
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
- Mortgage Loan Originator · NMLS# 1129696 · Verify on NMLS Consumer Access
- North Carolina Real Estate Broker · License# 343312 · Verify on NCREC
- North Carolina Insurance Producer · License# 19053198 · Property, Casualty, Life, Health · Verify on NAIC SBS
- 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.
