How to Use Asset Depletion for a Self-Employed Mortgage With No Income

The Quick Read: Asset depletion lets a self-employed borrower qualify from verified savings and investments instead of tax-return income. Eligible assets are discounted by asset type, reduced by the funds committed to the deal, and spread over a set number of months to produce a monthly qualifying income. Nothing is sold, and the file is reviewed on documented, verified assets under the applicable program, subject to lender guidelines.

• Eligible assets are discounted by type, and cash usually counts most fully.
• Down payment, closing costs and reserves come out of the pool before it is divided.
• A longer divisor shrinks the qualifying income in direct proportion.
• On a primary residence, asset depletion typically runs to about 80% LTV, while bank statement files can reach about 90% on a purchase or rate-term refinance.
• It qualifies the borrower, not the property, so pure rental purchases often fit DSCR better.

What Asset Depletion Actually Is

Asset depletion is a qualification method, not a loan secured by your accounts. Across the wholesale network, it means a lender takes your verified liquid assets and converts them into a hypothetical monthly income. That income then goes through a debt-to-income test like any other file.

You do not sell anything. You do not pledge the accounts. The assets stay where they are, and the lender is simply counting them as proof that you can carry the payment.

This is non-QM lending. These programs follow the investor’s own guidelines, not agency rules, so the details change from one program sheet to the next.

Why Self-Employed Borrowers With Strong Assets Get Stuck

Self-employed borrowers are usually stuck by write-offs, not by a lack of money. A business owner who runs expenses aggressively shows low taxable income on the return. A standard underwriter reads that return and sees a thin earner, even when the owner holds a large brokerage account and plenty of cash.

Bank statement programs solve part of this. They use 12 months of business or personal deposits, averaged, with a lender expense factor applied. If deposits are lumpy, or the business just sold, or cash flow is mostly in the form of a windfall, deposits tell the wrong story. Assets tell the right one.

That is where asset depletion fits. It suits borrowers whose wealth sits in accounts rather than in a steady paycheck or a steady deposit pattern.

Is It Right for You? A Short Diagnostic

Asset depletion works best when most of these are true:

• traditional personal-income documentation shows little or no income after write-offs.
• You hold substantial liquid assets in your own name.
• The assets are in accounts you can document with statements.
• You can cover the down payment and closing costs without draining the qualifying pool.
• The property is a primary residence or second home.

It is a poor fit when:

• Your liquid assets are modest. These programs expect large balances.
• Most of your net worth is unvested stock, which counts for nothing until it vests.
• Your money is mostly in the business account and you cannot show personal ownership.
• You plan to use cash-out proceeds from the same loan to qualify. Those proceeds never count.
• The goal is a pure rental purchase. A property-income program usually fits better, as covered below.

Be honest with yourself on the last point. An investor buying a rental with decent rent often finds DSCR cleaner than asset depletion. Asset depletion makes sense when the rent does not carry the deal, or when the loan is on a home you will occupy.

Which Assets Count, and at What Value

Programs do not count every dollar at face value. Cash usually counts most fully. Stocks, bonds and retirement accounts are often discounted, because their value can swing. The credit percentage depends on the program.

Counting a retirement account toward qualifying costs you nothing, because you are not withdrawing it. Actually pulling money out is a different matter. Tax treatment varies; consult a qualified professional before moving retirement funds.

How the Calculation Works, Step by Step

The math has five moving parts. Lenders vary on each one, which is why a quoted divisor means little without the program behind it.

1. Gather and document the assets. Statements prove ownership and value. The lender relies on third-party records, not on your word.

2. Apply credit percentages by asset type. Cash goes in near full value. Securities and retirement balances go in at a discount. Unvested stock goes in at zero.

3. Subtract funds committed to the deal. Down payment, closing costs and reserves come out first. Reserves are commonly around six months of the housing payment. What is left is the usable pool.

4. Divide by the program divisor. The usable pool is spread over a set number of months. That produces the monthly qualifying income. The divisor is a program choice, not a universal number.

5. Run the debt-to-income test. The derived income has to carry the new housing payment plus your other monthly debts. Each lender sets its own ceiling.

Programs also set minimums. Loan amounts typically run from about $125,000 to $3,500,000, and some programs require a large minimum in liquid assets. Those minimums sit on top of the DTI test, not in place of it. Confirm the live parameters for the program in play.

A Worked Example, Without the Dollar Noise

Picture a self-employed consultant. Her returns show small income after write-offs. She holds cash, a brokerage account, and some vested stock. She is buying a primary residence.

Run her file through the steps. The lender discounts the brokerage account and the stock by their credit percentages. It subtracts her down payment, closing costs and reserves. It divides the remaining pool by the divisor. Then it tests the result against the new housing payment and her other debts.

The divisor is the lever she can least control, and it moves the answer the most. The same pool gives very different income depending on that single number.

Notice what is missing: the property. Asset depletion never looks at what the home could rent for. It qualifies the borrower. If her pool is thin for the loan she wants, she has three levers: a smaller loan, a larger down payment from other funds, or a different program.

Structures and Variations

Programs in the wholesale network usually come in two shapes.

Pure asset qualifier. The borrower’s eligible assets, after credit percentages, must equal or exceed the entire loan amount. The file rests on assets alone. These are typically limited to primary residences and second homes.

Asset depletion as income. This is the method described above. It can stand alone, and it can also supplement documented income. A borrower with some income that falls short can add depletion income to close the gap. Minimum-asset rules can relax in a blended file, depending on the program.

Then there is the other self-employed path, bank statements. Here is how the choices compare on a primary residence:

Lendmire’s how bank statements and asset depletion size a self-employed mortgage goes deeper on that first choice. The takeaway here is simple: the borrower with strong assets and weak deposits goes one way, and the borrower with strong deposits and modest assets goes the other. A few programs allow a mix.

Business Money Versus Personal Money

Whose name is on the account matters. Most programs count personal liquid assets first. Business accounts are treated differently, and the treatment depends on the lender and on how the business is structured.

The common failure is commingling. An owner pays personal bills from the business account and moves money back and forth. The lender then cannot tell which funds are the borrower’s own. A clean split before the file goes in helps. Move funds well ahead of the application, keep a clear paper trail, and avoid large unexplained transfers. Underwriters ask about those, and a missing explanation can stall a file.

Also keep in mind that funds taken out of the business to buy the home reduce the business’s cash. Some lenders will want to see that the business can still operate.

Where the General Rule Breaks

These are the named edge cases that surprise borrowers.

Cash-out on an owner-occupied home. Cash-out proceeds never count toward qualifying assets. On the bank statement side, owner-occupied cash-out runs up to about 80% LTV on a primary residence with a fixed expense ratio, or 75% with an accountant-prepared ratio. A second home on cash-out tops out around 75% LTV. Those are cash-out ceilings. The 90% figure applies only to purchase and rate-term files. Terms depend on the lender’s guidelines, the property type, the leverage, and a full review of the credit profile.

Investment property. The pure asset qualifier is generally limited to primary and second homes. Investment property is typically reached only on the depletion path, and leverage there is lower than on a home you occupy. Investment cash-out on bank statement documentation tops out around 75% LTV. Investment purchase leverage on alt-doc varies by lender.

Depletion adds no property income. Even if the rental would cash flow well, the rent does not enter the calculation. That is the main reason DSCR usually fits a pure rental better. DSCR is reviewed around the property’s rent, and Lendmire’s complete DSCR loans guide covers how that works.

Each deal shrinks the next. Funds used for a down payment and reserves leave the pool. A second purchase starts with a smaller pool and so produces less qualifying income. Investors who stack deals this way run out of room.

Unvested stock. It counts for nothing until it vests. A tech founder rich on paper can show a small usable pool.

Market swings. Brokerage balances move, and the lender looks at the documented balance. A drop between statement and file review can reduce the usable pool.

Occupancy decides the paperwork. An owner-occupied file, meaning a primary residence or second home, is a consumer mortgage and follows consumer disclosure rules. A bank statement loan on a non-owner-occupied rental, including a short-term rental, is business-purpose and exempt from those consumer disclosures. Know which one your property is before you pick a program.

Why “No Income” Still Means a Test

“No income” on a tax return does not mean no underwriting. The federal ability-to-repay standard counts current or expected income or assets as a basis for repayment, so assets are a legitimate foundation. A lender relying on assets has to verify them with third-party records. That is why statements, not traditional personal-income documentation, are the core of the file.

The lender must also consider debt-to-income or residual income. The standard sets no fixed ceiling. Any cap you see in a program is that lender’s own policy. The old 43% figure came from a prior general definition that was replaced with a price-based test, so do not treat it as a legal limit.

Credit, reserves and the property still matter too. Asset depletion changes how income is measured. It does not remove the review.

Preparing the File

Good preparation is mostly about fewer questions later. Work through it in order.

1. Pull the statements. Collect every account you plan to count, in your own name, with complete pages.

2. Separate personal and business money. Do this well before you apply, and keep a record of every transfer.

3. Source large deposits. Keep paper for any recent large deposit or transfer.

4. List what counts and what does not. Mark vested versus unvested stock, retirement balances, and anything held in a trust or restricted account.

5. Decide what funds the deal. Pick the accounts for the down payment and closing costs, so the qualifying pool is not drained by accident.

6. Compare it with the other paths. Ask whether bank statements or DSCR produce a better result for this property. A broker who sees many lender sheets can run all three.

Key Terms Defined

Asset depletion: A qualification method that converts verified liquid assets into a monthly qualifying income without selling them.

Credit percentage: The share of an asset’s value a program counts, which is lower for securities and retirement accounts.

Divisor: The number of months over which the usable pool is spread; a longer divisor produces less income.

Usable pool: Eligible assets after credit percentages, less down payment, closing costs and reserves.

Asset qualifier: A structure where eligible assets must equal or exceed the whole loan amount.

DTI: The share of monthly income taken by the new housing payment and other debts.

Non-QM: Loans that follow an investor’s own guidelines rather than agency standards.

Next Step

If you are self-employed and want to see how the numbers work, Lendmire can help you compare bank statement loan options based on your deposits, the property, credit profile, leverage, and your goals. Owner-occupied availability is limited to the 16 states covered by Lendmire’s consumer mortgage licensing, and you can start a quote at 828-256-2183. The illustrative calculator on this page gives a rough estimate only, not a quote.

Programs in the wholesale network change as lender sheets change, so the best time to compare is before you choose a property, not after.

For current guidelines and terms, see Lendmire’s self-employed mortgage programs page.

About Lendmire

Lendmire is a mortgage brokerage (NMLS# 2371349) licensed for consumer mortgage lending in 16 states, arranging bank statement and other alternative-documentation mortgages — P&L-only, 1099-only and asset-based paths — through a wholesale lending network. Eligibility is determined by the lender on each file. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.

References

1. CFPB – 12 CFR 1026.43, Minimum Standards for Transactions Secured by a Dwelling

2. Cornell Legal Information Institute – 12 CFR 1026.43

3. Consumer Finance Monitor – CFPB Finalizes Ability-to-Repay and Qualified Mortgage Rules