The Quick Read: An asset depletion loan tends to beat a conventional mortgage when the retiree is buying a home to live in, holds a large brokerage, cash or savings balance, and reports little taxable income, because a conventional loan reads that income and mostly ignores the balance.
- Assets can cover the whole loan outright (asset qualifier path) or become monthly income (asset depletion path).
- The depletion path divides usable assets by 60 months, then runs the result through debt-to-income.
- A pure rental purchase usually fits a DSCR loan better than either.
- Program figures are the same in Alabama as anywhere else, subject to underwriting.
A retiree with $2 million in a brokerage account and a modest pension often looks poor on paper. Conventional underwriting sees Social Security, a pension and some interest. It does not see the portfolio as paycheck income. That gap is the whole reason this product exists.
What Does a Conventional Mortgage Actually Count?
A conventional mortgage counts documented income first. For a retiree, that means Social Security, pension, annuity payments and required withdrawals that show up on a return. Taxable brokerage balances and savings usually help only with the down payment and reserves.
Agency programs do have an asset-as-income route, but it is narrow. A practitioner comparison from Statements Ready says Fannie Mae limits it to employment-related assets, such as retirement accounts and lump-sum distributions, and divides by the loan’s amortization term. It adds that ordinary taxable brokerage and checking balances generally do not qualify. Fannie Mae’s own selling FAQ confirms that vested retirement funds are acceptable for down payment, closing costs and reserves.
Federal rules do not force this narrowness. A lender may rest its repayment decision on income, on assets, or on both, as the Federal Register preamble to the ability-to-repay rule explains. The lender must still verify what it relies on with third-party records, per 12 CFR 1026.43. Asset-based programs live in the space that flexibility opens up.
The Two Paths Across the Wholesale Network
Across the wholesale network, asset-based mortgages come in two forms. A borrower is reviewed on one path at a time. Never blend them.
The asset qualifier path. Eligible assets, after the credit percentages below, must equal or exceed the entire loan amount. No employment or income is documented. Through select programs, leverage runs up to 80% on a purchase and 75% on a refinance, on a principal residence or second home, with loans to $4,000,000. Credit floors at 600, subject to underwriting.
The asset depletion path. Eligible assets, after haircuts, are divided by 60 months. The result is monthly qualifying income that must carry the housing payment and other debts through the debt-to-income test. Loans run $125,000 to $3,500,000.
Both paths document the assets. “No income documentation” never means “no documentation.” Statements are reviewed, and the lender’s own calculation governs.
How Each Path Counts Your Money
The two tables differ, and mixing them is the most common file error.
| Asset | Qualifier path | Depletion path |
|---|---|---|
| Cash, savings, money market | 100% | 100% (cash accounts) |
| Certificates of deposit | 100% | 100% |
| Brokerage / securities | 100% | 80% |
| Private stock | Not published | 75% |
| 401(k) / IRA | 90% under 59½, 100% at 59½+ | 70% at any age |
| Real-estate equity | Not published | 60% |
Here is the sanctioned qualifier arithmetic, illustrative only. A borrower seeking an $800,000 loan holds $330,000 in brokerage accounts (counted at 100%), $300,000 in a 401(k) under 59½ (counted at 90%, or $270,000) and $200,000 in savings (100%). That is $800,000 of usable assets. The loan is reviewed on assets alone, subject to underwriting.
Now the depletion version. A borrower holds $1,500,000 in securities (80% counts, or $1,200,000) plus $300,000 in cash (100%). That is $1,500,000 usable. Divided by 60 months, it produces $25,000 of monthly qualifying income. That income then has to carry the housing payment and other debts through the debt-to-income test.
Not eligible on the depletion path: 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 borrowed funds are not published as eligible on either path. The documented route is converting them to a seasoned cash balance in a regulated account, with the source reviewed by the lender.
When Asset Depletion Wins
Asset depletion beats a conventional mortgage in these situations:
1. Large taxable portfolio, small reported income. The portfolio becomes qualifying income instead of sitting idle.
2. Business sale, inheritance or settlement. Funds from these sources are excused from the depletion path’s seasoning rule, though they are still documented.
3. Early retirement before pension or Social Security. Documented income is thin, but assets are not.
4. Retiree who does not want to liquidate. The income is a calculation. Nobody has to sell a position or withdraw a dollar.
5. Loan large enough that income-based debt-to-income fails. A big mortgage can overwhelm a pension even when net worth is high.
The qualifier path wins one step further. When usable assets cover the entire loan, no income is documented at all. Ability-to-repay review rests on the assets.
When Conventional Still Wins
Be honest about this side. Conventional is usually the better tool when:
- Documented income, such as Social Security plus pension plus required distributions, already clears the debt-to-income test.
- The loan is modest, so a large portfolio is not needed to qualify.
- The retiree wants the broadest lender choice and the most familiar documentation.
- The portfolio is mostly in categories the asset programs discount or exclude.
The CFPB’s General QM final rule replaced the old 43% debt-to-income cap with a price-based test. Loans outside that box are non-QM, and that is where lenders write their own asset formulas. Non-QM does not mean worse. It means the lender sets the method.
The head-to-head looks like this:
| Factor | Conventional | Asset-based (network) |
|---|---|---|
| What qualifies you | Documented income | Assets, alone or as income |
| Taxable brokerage balance | Mostly reserves only | Counts per path table |
| Income documents | Required | Not on qualifier path |
| Asset statements | Required | Required |
| Lender variation | Narrow | Wider, by program |
The Alabama Part
Alabama changes the context, not the program. Figures do not move by state. Lendmire’s consumer lending is licensed in Alabama, and a file is placed with select lenders in its network.
What changes is the borrower profile. Many Alabama retirees are pension-heavy, with homes that carry modest balances, and some hold lake or Gulf-area second homes. A second home is reviewed on both paths. An investment property qualifies only on the depletion path, at lower leverage.
Leverage, Seasoning and Minimums
These are ceilings and floors, not offers, and each is subject to underwriting.
On the depletion path, a principal residence or second home goes up to 80% on a purchase or rate-and-term refinance and 60% on a cash-out. An investment property goes up to 65% on a purchase or rate-and-term and 60% on a cash-out. Cash-out proceeds never count as qualifying assets.
Seasoning differs by path. The qualifier path wants 60 days and two months of statements per qualifying account. The depletion path wants statements at least 120 days old at application, plus the most recent within 45 days.
The depletion path also has asset minimums. Qualified assets must be at least the lesser of $1,000,000 or 1.25 times the loan, and never below $250,000 liquid when asset depletion is the only income source. If asset income only supplements documented income, it can do so up to a 45% debt-to-income ratio, and the minimum-assets rule is waived.
Credit follows the lender’s matrix on the depletion path. A first-time investor on that path needs a 700 score. Housing history is 0x30x12, and a housing event needs four years of seasoning on the depletion path.
What About a Rental Property?
Asset depletion is a personal-income method. DSCR is a property method. A DSCR loan is reviewed primarily on property-level rental income covering the payment, subject to lender guidelines. DSCR loans are designed for non-owner-occupied investment properties, and they are reviewed differently from a standard owner-occupied mortgage.
So a retiree buying a rental usually belongs in DSCR. The portfolio then supports reserves and source of funds instead of income. Lendmire’s complete DSCR loans guide covers that product. If rent does not cover the payment, the depletion path can still apply to an investment property at the lower leverage above. Select lenders in the network also review sub-1.00 DSCR files, though leverage and terms adjust.
Key Terms Defined
Asset depletion: a method that turns usable assets into monthly qualifying income by dividing them over a set number of months.
Asset qualifier: a path where eligible assets alone cover the whole loan, with no income documented.
Haircut: the share of an asset’s value a lender will not count.
Seasoning: how long funds must sit in an account before they count.
Debt-to-income: monthly debts divided by monthly qualifying income.
Mistakes That Derail These Files
- Depositing a large sum right before applying. Recent large deposits draw sourcing questions. Lendmire’s piece Bank Statement vs Conventional Mortgage When Deposits Shifted Recently covers the pattern.
- Assuming no documentation. Statements are always reviewed.
- Counting crypto or collectibles at full value. They are not published as eligible.
- Using the wrong path’s table. Qualifier and depletion percentages differ.
- Ignoring market risk. A portfolio that drops before the file is reviewed shrinks the usable total.
What to Do Before You Apply
1. Total your balances by account type.
2. Check statement dates against the seasoning rules above.
3. Decide primary home, second home or rental.
4. Compare the qualifier path and depletion path against your balances.
5. Run conventional first if your documented income might clear on its own.
Tax treatment varies; consult a qualified professional.
Frequently Asked Questions
Do I have to sell investments to use an asset depletion loan?
No. On the depletion path, the income is a calculation, not a withdrawal. Usable assets are divided by 60 months to produce qualifying income. You keep your positions, though the lender documents them with statements.
Can retirement accounts count?
Yes, through select programs. On the qualifier path, a 401(k) or IRA counts at 90% under age 59½ and 100% at 59½ or older. On the depletion path, retirement accounts count at 70% at any age, subject to underwriting.
Is this the same as a no-doc loan?
No. No personal income is documented on the qualifier path, but the assets are. Statements are required on both paths, and the lender reviews ability to repay.
Can I use this to buy a rental?
Only on the depletion path, at 65% on a purchase or 60% on a cash-out, subject to underwriting. Most rental purchases fit DSCR better, since that loan rests on the property’s rent.
Does Alabama change the numbers?
No. Program figures are the same in every state. Alabama is one of 16 states where Lendmire’s consumer lending is licensed.
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.
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. Statements Ready, asset depletion at Fannie Mae vs Freddie Mac
3. Federal Register, ability-to-repay final rule
4. Cornell LII, 12 CFR 1026.43
This article is part of Lendmire’s asset-based mortgage program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: How Asset Depletion Mortgage Eligible Assets Work on a Jumbo Loan · Is an Asset Qualifier Mortgage Harder to Get Than an Asset Depletion Loan? · How an Asset Depletion Mortgage Works
Guides: Asset-Based Mortgage in Alabama
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.