The Quick Read: An asset depletion loan does not assume any set number of housing payments. It divides your usable assets by 60 months to create qualifying income, and the reserves that are counted in months of housing payments are a separate test. On the asset depletion path, the program publishes no reserve months. On the asset qualifier path, reserves are not required at or below 75% loan-to-value, and above that the lender sets them. All of this is subject to underwriting and varies by file.
- The 60 is a divisor, not a count of payments you must be able to make.
- Reserves are the months-of-payments number, and they are tested separately from income.
- The qualifier path uses no divisor at all. Eligible assets must cover the entire loan.
- A rental investor who is reviewed on the property’s rent is on a different loan type, covered below.
Two Different “Months” People Mix Up
The confusion is understandable, because both numbers are measured in months. They do completely different jobs.
| Factor | Depletion divisor | Reserves |
|---|---|---|
| What it is | Months used to spread assets into income | Months of housing payments held after closing |
| What it does | Creates qualifying income | Shows a cushion remains |
| Where it sits | Income math, then debt-to-income | A separate liquidity check |
| Who sets it | The program | The program or the lender |
Across Lendmire’s wholesale network, the divisor is the number that moves a file. A longer divisor spreads the same assets thinner, which produces less income. A shorter one produces more. Reserves rarely change the income math directly. They change how much cash is left over.
Lendmire is a broker. It arranges these loans through select lenders, and each lender’s underwriter applies the final calculation.
Which Path Are You On?
Asset-based mortgages come in two forms, and a borrower is reviewed on one path at a time. Mixing their numbers is the most common way people end up with a wrong estimate.
The asset qualifier path. Your eligible assets, after the credit percentages, must equal or exceed the entire loan amount. No employment or income is documented. There is no divisor, so there is no income to calculate. Leverage runs up to 80% on a purchase and 75% on a refinance, on a principal residence or second home. Loans go up to $4,000,000, through select programs.
The asset depletion path. Your eligible assets, after the haircuts, are divided by 60 months. The result is monthly qualifying income, which must carry the housing payment and your other debts through the debt-to-income test. Loan amounts run from $125,000 to $3,500,000, subject to underwriting.
Both paths are consumer mortgages for people with large balances and light documented income. That usually means retirees, business sellers, and people living on a portfolio or a settlement. The assets are documented on both paths. Income is the thing that is not documented on the qualifier path.
How Many Months of Housing Payments Does the Program Assume?
The honest answer is zero published months on the depletion path, and a conditional answer on the qualifier path.
On the asset qualifier path, reserves are not required at or below 75% loan-to-value. Above that, the lender sets the requirement. Your leverage choice therefore decides whether the question even applies.
On the asset depletion path, no reserve months are published. That does not mean the lender ignores your cash after closing. The usable assets must still clear the minimums, and the lender’s own review governs. It means there is no program-wide number to plan around, so ask the lender for theirs before you commit to a property.
Outside this program, reserves are a common idea. They are often calculated as a multiple of the full monthly housing payment, as the reference entry on PITI explains. Each lender sets its own multiple across the brokerage’s network, and it depends on loan size, leverage, and the borrower’s profile.
What Counts as the “Housing Payment”
When a lender measures reserves in months of housing payments, it usually means the full obligation. That is principal, interest, property taxes, homeowners insurance, and any association dues. Lenders shorten this to PITIA, for principal, interest, taxes, insurance, and association dues.
The same full payment is what your qualifying income must carry on the depletion path. A low loan balance with high taxes and dues can still strain the debt-to-income test. Look at the whole monthly obligation, not just the loan payment.
How the 60-Month Divisor Turns Assets Into Income
Here is the step-by-step on the asset depletion path.
1. List your eligible assets and apply the haircuts. 2. Add up the usable balances. 3. Divide by 60 months. 4. Run the resulting monthly income through the debt-to-income test with the housing payment and your other debts.
The haircuts matter. On this path, cash accounts and certificates of deposit count at 100%. Securities count at 80%, private stock at 75%, retirement accounts at 70% at any age, and real-estate equity at 60%. Custodial accounts, deferred compensation, escrow accounts, foreign funds, cash on hand, stock options, and non-vested restricted stock units are not eligible.
Worked example (illustrative; the lender’s own calculation governs). Say you hold $1,500,000 in securities, which count at 80% for $1,200,000, and $300,000 in cash, which counts at 100%. Usable assets total $1,500,000. Divided by 60 months, that is $25,000 of monthly qualifying income. That income then has to carry the housing payment and your other debts through the debt-to-income test.
Now picture the same pool at a longer divisor. The qualifying income shrinks in proportion. That is why a lender’s divisor matters more than almost any other term, and why agency methods that use their own divisors cannot be compared to this program’s directly.
The circular effect
More cash into the down payment means a smaller usable pool, which means less income. Less income means a smaller payment you can carry. A larger loan means a larger payment against the same income. Lenders look at the pool after what the purchase consumes, so ask how they treat your down payment and closing costs. Where your funds sit also matters: if the same balances must cover the purchase and the income math, the same dollars can only do one job.
Does Depletion Mean You Spend the Assets?
No. The divisor is a model, not a withdrawal schedule. You keep the assets, and you are not required to cash them in or spend them down. They are also not pledged as collateral. They exist to show the lender how repayment could happen.
The lender does need proof they are real. On the depletion path, 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. On the qualifier path, the seasoning is 60 days, with two months of statements for each qualifying account.
Federal rules back this up in general terms. The federal ability-to-repay rule lets a lender base repayment ability on income, on assets other than the home being financed, or on both. It does not set an asset-conversion divisor. That is also why non-QM programs differ from one another.
The old standard for calculating income, known as appendix Q, was removed. A law-firm summary of the change explains what that standard covered. Non-QM programs are not tied to it, which is another reason their formulas vary.
What Counts, and What Does Not
On the qualifier path, the balances count like this:
- Brokerage accounts, certificates of deposit, money market, and savings count at 100%.
- Retirement accounts count at 90% under age 59½ and 100% at 59½ or older.
- Accounts combine.
Take an $800,000 loan with $330,000 in brokerage accounts, $300,000 in a 401(k) under 59½, and $200,000 in savings. The brokerage counts at 100% ($330,000), the 401(k) at 90% ($270,000), and the savings at 100% ($200,000). That is $800,000 of usable assets, enough to qualify on assets alone, subject to underwriting.
Cryptocurrency, precious metals, collectibles, and borrowed or pledged funds are not published as eligible on either path. The documented route is converting them to a seasoned cash balance in a regulated account. The lender then reviews the source of the funds.
Cash-out proceeds from the loan never count as qualifying assets on the depletion path.
Minimums on the Depletion Path
The depletion path asks for qualified assets of at least the lesser of $1,000,000 or 1.25 times the loan balance. If depletion is your only income source, you also need at least $250,000 in liquid assets, regardless of loan size.
If you also have documented income, asset-derived income may supplement it up to a 45% debt-to-income ratio. When assets supplement income this way, the minimum-assets rule is waived.
Credit follows the lender’s matrix on the depletion path. The qualifier path has a 600 minimum score. A first-time investor on the depletion path needs 700. 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 four years of seasoning on the depletion path.
Rental Investors: Is This Even the Right Loan?
For a pure rental purchase, usually not. Asset depletion is a borrower-income method. It fits someone who needs personal income created from savings, such as a retiree or a recent business seller buying a home to live in.
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. Your savings still matter for reserves and the down payment, but they are not turned into income. Lendmire’s complete DSCR loans guide walks through that path.
If you do want to buy an investment property on the asset depletion path, leverage is lower. It runs up to 65% on a purchase or rate-and-term refinance, and 60% on a cash-out refinance, subject to underwriting. Principal residences and second homes get up to 80% on a purchase or rate-and-term and 60% on a cash-out.
If your balances are larger, Lendmire’s piece How Many Months of Reserves Does an Asset Depletion Jumbo Loan Require? covers that case. Final terms depend on lender guidelines, property type, leverage, and the borrower’s complete credit picture.
Mistakes That Stall Files
- Treating the divisor as a payment count. The 60 does not tell you how many payments you can afford. It tells the lender how to convert assets.
- Blending the two paths. Qualifier-path percentages do not apply on the depletion path, and the reverse is also true.
- Counting the same dollars twice. Money used for the down payment cannot also sit in the income pool.
- Forgetting the haircuts. A $1,000,000 securities account counts as $800,000 on the depletion path.
- Assuming no documentation. Assets, credit, and statements are all reviewed. Only income documentation is skipped on the qualifier path.
- Moving money at the last minute. Large deposits get sourced, and fresh transfers can fail seasoning.
Five Steps to Estimate Your Own Number
1. Pick your path: assets that cover the whole loan, or assets that become income.
2. Apply the percentages for that path to each account.
3. Subtract the cash you plan to use at closing.
4. On the depletion path, divide by 60 and test the income against the full housing payment and your debts.
5. Ask the lender what cushion of liquid funds they expect after closing.
Every figure here is illustrative. The lender’s calculation governs.
Key Terms Defined
Asset depletion: a method that converts eligible assets into monthly qualifying income by dividing them over a set number of months.
Divisor: the number of months the assets are divided by. On the depletion path it is 60.
Reserves: liquid funds the borrower holds after closing, usually measured in months of the full housing payment.
PITIA: principal, interest, taxes, insurance, and association dues, the full monthly housing obligation.
Haircut: the share of an asset’s value a lender subtracts because the asset can lose value or is harder to access.
Seasoning: how long funds must sit in an account before they count.
Frequently Asked Questions
Does the asset depletion loan require a certain number of months of reserves?
On the depletion path, no reserve months are published, so ask the lender what they expect. On the qualifier path, none are required at or below 75% loan-to-value. Above that, the lender sets them. Either way, the figure is not a federal standard, and it varies by lender and file.
Why does the divisor matter so much?
Because it directly sets your qualifying income. The same assets divided by a longer period produce less monthly income. Lendmire’s network uses 60 months on the depletion path. Lenders and agency methods may use different numbers, so compare the full set of terms, not just one.
Can retirement accounts count?
Yes. On the depletion path they count at 70% at any age. On the qualifier path they count at 90% under 59½ and 100% at 59½ or older. Both are subject to underwriting.
Do I have to sell my investments to qualify?
No. The assets are not pledged and you are not required to liquidate them. They demonstrate that repayment is possible. The lender does require statements and may ask about large deposits.
Is this the right loan for buying a rental?
Usually a DSCR loan fits a pure rental better, because it is reviewed on the property’s rent against the payment rather than on your income. Asset depletion is more useful when you need personal income created from savings. Programs below 1.00 coverage are available through select lenders in the network, though loan-to-value and terms adjust.
Your Next Step
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. Reach the team at 828-256-2183 or request a quote.
For current guidelines and terms, see Lendmire’s asset-based mortgage programs page.
About Lendmire
Lendmire (NMLS# 2371349) is a mortgage broker that arranges asset-based consumer mortgages through select lenders in its wholesale network. Its consumer mortgage lending is licensed in 16 states. Programs change, and every file is underwritten individually. This article is not a commitment to lend. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
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References
2. Federal ability-to-repay rule, 12 CFR 1026.43 (Consumer Financial Protection Bureau)
3. Holland & Knight: CFPB Amends Its Ability-to-Repay/Qualified Mortgage Rule
This article is part of Lendmire’s asset-based mortgage program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: Delayed Financing vs. an Asset Qualifier Loan After Paying Cash for a Montana Home · Asset Depletion vs DSCR for a North Carolina Rental Purchase · How Much of Mutual Funds Counts Toward Asset Depletion Income?
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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Compliance and disclosures. Lendmire (NMLS# 2371349) is a licensed mortgage broker and is not a direct lender, depository institution, financial advisor, or tax professional. Content in this article is general market analysis and educational information — not financial, legal, or tax advice for any specific situation. Lendmire does not guarantee loan approval; every transaction is subject to underwriting by the funding lender. Mortgage pricing and loan program guidelines are subject to change at any time without notice and vary by borrower characteristics, property type, and state regulations. Lendmire complies with Equal Housing Opportunity. Licensure verification: NMLS Consumer Access.