The Quick Read: On the asset depletion path, usable savings and investments are divided by 60 months to create a notional monthly income, which is added to your documented income so a debt-to-income ratio that runs too high can fall back under the program’s cap, with no assets sold and nothing withdrawn.
- Nothing is liquidated. The 60-month division is a qualifying convention, not a withdrawal schedule.
- It still runs through debt-to-income. Asset income feeds the ratio. It does not remove it.
- Supplemental use carries a 45% ceiling on the depletion path, subject to underwriting. The minimum-assets rule is waived when assets only supplement income.
- Haircuts shrink the pool. Securities count at 80%, retirement accounts at 70%, real-estate equity at 60%, and cash at 100%.
- A second path exists. If your assets cover the whole loan, the asset qualifier path skips income and the ratio entirely.
Why a Strong Balance Sheet Still Fails the Ratio
Debt-to-income compares your monthly obligations to your documented monthly income. A borrower can be wealthy and still fail it.
The pattern shows up often with retirees living off a portfolio, owners who just sold a business, and early-retired professionals. It also hits investors whose traditional personal-income documentation shows depreciation-reduced income alongside several mortgages. The balance sheet is large. The income line is small. The ratio only reads the income line.
Supplemental asset depletion is the bridge for that gap. It converts part of the balance sheet into income the ratio can read.
One boundary matters here. This is a consumer mortgage tool, built for principal residences and second homes, with investment property allowed only on the depletion path and at lower leverage. A property that will be rented and cash-flows is usually better served by a DSCR loan, which tests the property’s income rather than yours. More on that choice below.
Two Paths, and Only One at a Time
Across the wholesale network Lendmire works with, asset-based mortgages come in two forms. A borrower is reviewed on one path at a time, and the figures never blend.
The asset qualifier path covers the entire loan with eligible assets. If your usable assets equal or exceed the loan amount, the file is reviewed on assets alone. No employment or income is documented, so your debt-to-income ratio is not the test. Loans run up to $4,000,000, through select programs and subject to underwriting.
The asset depletion path turns usable assets into monthly income, divided over 60 months. That income carries the housing payment and other debts through the debt-to-income test. Loans run from $125,000 to $3,500,000. This is the path where “supplemental” applies, because the asset income can sit on top of income you already document.
The rest of this article focuses on the depletion path, since that is where a too-high ratio gets repaired.
How Underwriting Treats Supplemental Asset Income, Step by Step
The sequence is consistent across programs, even though each program sets its own numbers. The lender’s own calculation governs, and everything below is illustrative.
1. Inventory the accounts. Cash, certificates of deposit, securities, private stock, retirement accounts and real-estate equity are the eligible classes on this path.
2. Apply the haircuts. Each class counts at a share of its balance, listed in the table below.
3. Take out money that is spoken for. Down payment and closing funds leave the pool first. Assets used for the purchase cannot also generate income.
4. Divide by 60 months. The result is the monthly qualifying income. A longer divisor would shrink it. A shorter one would raise it.
5. Add it to documented income. Wages, pension, Social Security, self-employment or rental income stay in the file, and the asset income joins them.
6. Re-run the ratio. Total obligations, including the new housing payment, are divided by the combined income. The result must come in at or under the program ceiling.
Documentation is real. Statements must be at least 120 days old at application, plus the most recent statement within 45 days. Funds from the sale of a business, an inheritance or a legal settlement are excused from that seasoning. “No income test” never means “no documentation.” The assets themselves are verified.
What Counts, and at What Percentage
On the depletion path, each asset class counts at a share of its balance:
| Asset class (depletion path) | Share that counts |
|---|---|
| Cash accounts | 100% |
| Certificates of deposit | 100% |
| Securities | 80% |
| Private stock | 75% |
| Retirement accounts (any age) | 70% |
| Real-estate equity | 60% |
Several holdings do not count on this path. Those include custodial accounts, deferred compensation, escrow accounts, foreign funds, cash on hand, stock options, non-vested restricted stock units, and funds from non-regulated financial companies.
Cryptocurrency, precious metals, collectibles, and pledged or borrowed funds are not published as eligible on either path. The documented route is to convert them into a seasoned cash balance in a regulated account, with the lender reviewing the source. Do not assume they count at any percentage.
The qualifier path uses a different table, which applies only if your assets cover the whole loan:
| Asset class (qualifier path) | Share that counts |
|---|---|
| Brokerage accounts | 100% |
| Certificates of deposit, money market, savings | 100% |
| 401(k) and IRA, under age 59½ | 90% |
| 401(k) and IRA, 59½ or older | 100% |
Accounts combine. The qualifier path asks for 60 days of seasoning and two months of statements per qualifying account.
The Math, Start to Finish
Take the depletion-path example this program is built around. A borrower holds $1,500,000 in securities, which count at 80%, or $1,200,000. The borrower also holds $300,000 in cash at 100%. Usable assets total $1,500,000. Divided by 60 months, that produces $25,000 of monthly qualifying income, which then carries the housing payment and other debts through the debt-to-income test.
Now the “too high” repair itself, which is simple algebra. Say your obligations, including the new housing payment, consume 55% of your documented income. The program ceiling when assets supplement is 45%. To get from 55% to 45%, your total income must rise until obligations divide into it at 45%.
Obligations are 0.55 of documented income. Divide by 0.45 and total income must reach about 1.22 times documented income. So asset income must add roughly 22% on top of what you already document.
Convert that back to assets. Because the divisor is 60 months, usable assets must equal about 13 times your monthly documented income (0.22 × 60, roughly 13.3). If you document the equivalent of a modest monthly income, the pool needed is modest. If your documented income is large and your ratio is still high, the pool needed grows fast.
Two cautions keep this honest. First, the new loan raises the housing payment, so a larger loan pushes the target up. Second, the pool is measured after haircuts and after the down payment comes out. A portfolio that looks large can shrink by a third before the division happens.
Run your own numbers this way before you apply. If the back-solve says you need more usable assets than you hold, the structure will not rescue the file, and another route is the better use of time.
Where the General Rule Breaks
The mechanics above hold in most files. These edge cases are where they stop holding.
Supplemental versus sole-source. When asset depletion is your only income, the depletion path asks for qualified assets of at least the lesser of $1,000,000 or 1.25 times the loan balance, and never below $250,000 in liquid assets. When assets only supplement documented income, that minimum-assets rule is waived, though the 45% ceiling applies, subject to underwriting. Some lenders in the network require asset depletion to be the sole income source, and others allow it alongside wages, pension or Social Security. The strictest overlays want the sole-source treatment, so ask which structure a lender permits before you build the file around it.
Investment property. The depletion path allows investment property, but only at lower leverage: up to 65% on a purchase or rate-and-term refinance, and 60% on a cash-out refinance. Principal residences and second homes reach 80% on a purchase or rate-and-term refinance and 60% on a cash-out. Cash-out proceeds never count as qualifying assets. A first-time investor on the depletion path needs a 700 credit score. Final terms depend on lender guidelines, property type, leverage, and the borrower’s complete credit picture.
Credit. The depletion path follows the lender’s score and loan-amount matrix. Housing history is 0x30x12, though one 30-day late in the last twelve months is considered case by case. Multiple bankruptcies are not eligible, and a housing event needs 4 years of seasoning on this path. None of this is a promise of approval.
Thin conversion. Asset income looks small next to total asset value. A divisor of 60 months means that each $60,000 of usable assets yields only $1,000 of monthly qualifying income. Plenty of borrowers discover their large portfolio supports less than they assumed.
Double counting. Money used for the down payment cannot also generate income. Interest and dividends from the same accounts generally cannot be counted twice either.
Scope. This is a consumer mortgage program, and Lendmire’s consumer mortgage lending is licensed in 16 states: Alabama, California, Colorado, Florida, Georgia, Indiana, Michigan, Montana, New Mexico, North Carolina, Ohio, Pennsylvania, Tennessee, Texas, Virginia and Washington. It is separate from Lendmire’s investor loan platform.
Why Nothing Federal Fixes the Numbers
Asset depletion has no single national formula, which is why the divisor, the haircuts and the ceiling differ from one program to the next. The OCC’s bulletin on asset dissipation underwriting defines the method as using assets to calculate a hypothetical annuity stream that is added to other income when evaluating ability to pay. That “added to other income” language is the basis for supplemental use.
On owner-occupied consumer loans, the federal rule at 12 CFR 1026.43 requires the lender to consider and verify the income or assets it relies on. It does not name a debt-to-income threshold. A legal analysis from Alston & Bird notes that the rule contains no bright-line limits on debt-to-income or residual income, and that lenders must keep documented policies. The old 43% figure many guides still quote is a historical cap, not current law. Each program therefore sets its own ceiling, and the 45% figure here belongs to this program alone.
Supplemental, Sole-Source, Assets Only, or DSCR?
The real investor decision is which structure fits your file. This table compares them side by side.
| Route | What it tests | Fits when |
|---|---|---|
| Depletion, supplemental | Income plus asset income | You document some income and the ratio is too high |
| Depletion, sole source | Asset income only | Your assets are your income |
| Asset qualifier | Assets vs. whole loan | Assets equal or exceed the loan amount |
| DSCR loan | Property rent vs. its payment | The subject property is a rental that cash-flows |
A few rules of thumb follow from the table.
If your assets cover the whole loan, the qualifier path can be the cleaner choice, because it avoids the ratio altogether. The tradeoff is that those assets must equal the full loan, which is a high bar.
If you document steady income and only miss the ratio by a margin, the supplemental route is built for you. Run the back-solve first.
If you are buying a rental, step back. DSCR loans are designed for non-owner-occupied investment properties. Because they are business-purpose investor loans, they are reviewed differently from a standard owner-occupied mortgage. A DSCR file qualifies primarily on property-level rental income covering the payment, subject to lender guidelines, so your personal ratio is not the gate. Lendmire’s piece How to Qualify for a Portfolio DSCR Loan With a High Debt-to-Income Ratio covers that route, and the complete DSCR loans guide covers the program itself.
If your wealth sits mostly in an operating business and you show income through deposits, a different tool applies. Lendmire’s article Asset Depletion vs Bank Statement Loan When Business Income Is Low walks through that comparison.
Other Levers Before You Lean on Assets
Assets are not the only way to move the ratio. Several adjustments often work together.
- Pay off a specific debt. Retiring one installment loan can drop the obligation total more than a large asset conversion adds.
- Shrink the loan. A larger down payment lowers the housing payment. It also shrinks the asset pool, so check both sides of that trade.
- Choose which assets to count. Cash counts at 100%, while retirement accounts count at 70%. Moving funds between accounts changes the usable total, but seasoning rules apply to any transfer.
- Consider the sequence. Down payment funds come out first. Assets you intend to keep generating income should not be the ones you spend.
Lenders review all of this together, and each file is underwritten individually.
What Asset Income Does Not Fix
Asset income repairs one number. It does not repair the file.
Credit still has to meet the lender’s matrix. The property still needs to qualify for the occupancy you claim. Leverage limits still apply, and a cash-out transaction on this path is capped at 60%. The lender still verifies every account. A program that converts liquidity into income remains an underwritten mortgage, and approval is never certain until the lender completes its review.
Tax treatment varies; consult a qualified professional.
Key Terms Defined
Debt-to-income ratio: Your total monthly obligations divided by your monthly income, used by lenders to judge whether you can carry a loan.
Asset depletion path: The route that turns usable assets into a monthly qualifying income by dividing them over 60 months.
Asset qualifier path: The route where eligible assets must cover the entire loan, and no income is documented.
Haircut: The share of an asset’s balance that is left out because the asset is less liquid or less certain.
Supplemental use: Adding asset-derived income on top of documented income, rather than relying on assets alone.
Notional income: Income that exists only for qualifying, because nothing is actually withdrawn.
Frequently Asked Questions
Do I have to sell or withdraw my investments?
No. The 60-month division is a qualifying convention only. Your accounts stay invested, and you keep them. They must still be documented and seasoned, and funds used for the down payment or closing leave the pool before the division.
Can asset income be combined with a pension, wages or Social Security?
On many programs, yes. Others require asset depletion to be the sole income source, so the answer depends on the lender. When assets supplement documented income on the depletion path, the minimum-assets rule is waived and the 45% ceiling applies, subject to underwriting.
Do retirement accounts count?
They do, at a reduced share. On the depletion path, retirement accounts count at 70% at any age. On the qualifier path, 401(k) and IRA balances count at 90% under age 59½ and at 100% from 59½ on.
Can the same assets cover my down payment and generate income?
Not both. Down payment and closing funds come out of the pool first, and only what remains is divided by 60 months. Interest and dividends from the same accounts generally cannot be counted again either.
Is this the right tool for buying a rental property?
Only sometimes. The depletion path allows investment property, but at 65% on a purchase and 60% on a cash-out, with a 700 score for a first-time investor. If the rental cash-flows, a DSCR loan tests the property’s income instead of yours, and it is usually the cleaner fit.
If you are qualifying on assets rather than income and want to see how the numbers work, Lendmire can help you compare asset-based mortgage options based on your statements, the property, credit profile, leverage, and your goals. Programs are placed through select lenders in Lendmire’s wholesale network, and nothing here is a commitment to lend. Program figures change and are subject to underwriting.
Borrowers who run the back-solve before applying tend to learn the answer early: a pool of roughly 13 times documented monthly income usually moves a 55% ratio under a 45% ceiling, and anything short of that points to another route.
About Lendmire
Lendmire, NMLS# 2371349, is a mortgage brokerage with consumer lending licenses in 16 states. Bank statement, P&L-only, 1099-only and asset-based mortgages are arranged through wholesale lending partners for borrowers whose tax returns understate their income, and each application is reviewed individually by the lender. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
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References
1. OCC Bulletin 2019-36, Lending Standards for Asset Dissipation Underwriting
2. CFPB, Regulation Z §1026.43, Minimum Standards for Transactions Secured by a Dwelling
3. Alston & Bird, Revised Qualified Mortgage Rules
This article is part of Lendmire’s asset-based mortgage program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: Bank Statement Loan vs Asset Depletion Loan for High Net Worth Borrowers · How an Asset Depletion Jumbo Loan Works · How Asset Depletion Counts Income for a Rental Portfolio Buyer
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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Legal disclosures. Lendmire (NMLS# 2371349) is a state-licensed mortgage brokerage that arranges financing through wholesale lender relationships. Lendmire is not a direct lender, depository institution, or registered financial advisor. The discussion above is general informational content about real estate financing — it is not financial, legal, or tax advice, and readers should consult licensed professionals for guidance on their individual circumstances. Loan inquiries are subject to lender underwriting; this article does not represent a commitment to lend. Loan terms, rates, and qualification standards vary by borrower, property, and state, and are subject to change at any time. Equal Housing Opportunity. NMLS Consumer Access: nmlsconsumeraccess.org.