The Quick Read: It tends to win when the retiree’s wealth sits in accounts that conventional agency rules do not count, or when the loan structure falls outside the agency box. Asset depletion turns usable balances into a monthly qualifying income by dividing them by 60 months, and that income then runs through the debt-to-income test, subject to underwriting.
- Asset depletion tests the person’s balances. Conventional tests documented income. DSCR tests the property.
- On a principal residence or second home, the depletion path reaches 80% on a purchase and 60% on a cash-out.
- On an investment property, the depletion path tops out at 65% on a purchase and 60% on a cash-out.
- A second path, the asset qualifier, skips income entirely when eligible assets cover the whole loan.
- Florida insurance, HOA dues and condo reserves raise the payment the imputed income must carry.
That is the short version. The rest of this piece covers the mechanics, the cases where conventional still wins, and what changes when the property is a rental. Programs change, and every file is underwritten individually. Nothing here is a commitment to lend.
What Is Asset Depletion, in Plain Words?
Asset depletion converts a verified balance into notional monthly income. The borrower does not sell anything. The lender counts a share of each account, adds them up, divides by 60 months, and treats the result as income for the debt-to-income test.
Lendmire is a broker. It places these loans through select lenders in its wholesale network, and the figures below reflect that network’s guidelines, not any single lender’s.
There are two paths, and a borrower is qualified on one at a time:
- Asset qualifier path. Eligible assets, after the credit percentages, must equal or exceed the entire loan amount. No employment or income is documented.
- Asset depletion path. Usable assets divided by 60 months becomes qualifying income. That income must carry the full housing payment and other debts.
Both paths document the assets. “No income documentation” never means “no documentation.” Statements, seasoning and source review all apply.
When Does Asset Depletion Actually Win?
It wins in three situations. The first is a portfolio held mostly outside employer plans. The second is a retiree with thin documented income and a large balance. The third is a loan the agency box does not allow, such as a larger amount or a particular occupancy.
Here is the agency contrast, kept short. Fannie Mae’s Selling Guide section B3-3.4-06 covers employment-related assets. It limits that approach to purchases and limited cash-out refinances on a principal residence or second home. Investment property is excluded. If the owner of the asset is not a borrower on the loan, the asset does not count. Any penalty on a full distribution is subtracted first. Fannie Mae restructured the income chapter in announcement SEL-2026-02, so older articles citing the former section number are out of date.
A retiree whose money sits in brokerage, savings and money market accounts, not in an employer-related payout, often finds the conventional route counts very little of it. That is where a non-agency asset path earns its place.
| Retiree profile | Path that tends to win | Main risk |
|---|---|---|
| Pension and Social Security cover the housing payment | Conventional | Asset path adds nothing |
| Large balances, modest documented income, owner-used home | Asset depletion | Payment vs. imputed income |
| Liquid assets exceed the whole loan | Asset qualifier | Seasoning and statement rules |
| Rental purchase | DSCR | Rent must cover the payment |
| Pension plus large portfolio | Depletion supplementing income | Mismatched documents |
How the Math Runs, Step by Step
Take the sanctioned illustration. A retiree holds $1,500,000 in securities and $300,000 in cash.
1. Apply the haircuts. On the depletion path, securities count at 80%, which is $1,200,000. Cash counts at 100%, which is $300,000.
2. Add the usable total. That is $1,500,000 of usable assets.
3. Divide by 60 months. The result is $25,000 of monthly qualifying income.
4. Run the debt-to-income test. That income must carry the full housing payment, including taxes, insurance and HOA dues, plus other debts.
The figures are illustrative. The lender’s own calculation governs, and the results are subject to underwriting.
The haircuts on the depletion path are fixed by asset type:
| Asset type | Share that counts (depletion path) |
|---|---|
| Cash accounts | 100% |
| Certificates of deposit | 100% |
| Securities | 80% |
| Private stock | 75% |
| Retirement accounts | 70% at any age |
| Real-estate equity | 60% |
Not eligible on this 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 and collectibles 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.
Minimums matter too. The depletion path wants qualified assets of at least the lesser of $1,000,000 or 1.25 times the loan balance. When depletion is the only income source, liquid assets must be at least $250,000. Asset-derived income can also supplement documented income up to a 45% debt-to-income ratio, and when it does, the minimum-assets rule is waived.
The Qualifier Path: No Income at All
If liquid assets cover the whole loan, the asset qualifier path can be cleaner. No employment or income is documented. The test is whether eligible assets, after credit percentages, equal or exceed the loan.
Credit percentages on this path are higher than on depletion. Brokerage, CDs, money market and savings count at 100%. A 401(k) or IRA counts at 90% under age 59½ and 100% at 59½ or older. Accounts combine.
The sanctioned example: an $800,000 loan, with $330,000 in brokerage accounts (100%, so $330,000), $300,000 in a 401(k) for a borrower under 59½ (90%, so $270,000), and $200,000 in savings (100%, so $200,000). That counts $800,000 of usable assets and is reviewed on assets alone, subject to underwriting.
Leverage on the qualifier path is up to 80% on a purchase and 75% on a refinance. Loans reach $4,000,000. Credit starts at a 600 minimum score. No reserves are required at or below 75% loan-to-value; above that, the lender sets them.
Leverage and Loan Size on the Depletion Path
Leverage on the depletion path depends on the occupancy:
- Principal residence or second home: up to 80% on a purchase or rate-and-term refinance, and 60% on a cash-out refinance.
- Investment property: up to 65% on a purchase or rate-and-term refinance, and 60% on a cash-out.
Loan amounts run from $125,000 to $3,500,000. Cash-out proceeds never count as qualifying assets. Credit follows the lender’s matrix. A first-time investor on the depletion path needs a 700 score. 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.
These are ceilings and floors, not offers. Each file is reviewed individually.
Seasoning and Documents
The assets are documented on both paths, and the rules differ.
On the qualifier path, funds need 60 days of seasoning, with two months of statements for each qualifying account. 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.
Document mismatch is the quiet friction point. A retiree with a pension award letter, a brokerage statement and an IRA statement in three different formats often generates more review questions than the math does. Before any money moves, gather statements for every account and keep balances where they are. Transferring or selling assets mid-file can change the eligible balance and restart seasoning.
For retirement accounts on the qualifier path, age matters. A borrower under 59½ gets 90% credit. At 59½ it moves to 100%. On the depletion path, retirement accounts count at 70% at any age.
Conventional rules require all owners of a jointly held asset to be borrowers. Programs in the network have similar account-holder rules, so confirm whose name is on each statement early.
Where Conventional Still Wins
Asset depletion is not always the better tool, and a straight answer says so.
Conventional wins when documented income, such as Social Security, pension and required distributions, already carries the housing payment with room to spare. Adding an asset-income calculation to a file that already clears adds documents, not value.
It also wins on smaller loans. The depletion path starts at $125,000 and wants at least $250,000 in liquid assets when it is the only income source, so a small loan with a large portfolio is an odd fit.
And it wins when the borrower will not accept the structure. On the depletion path, each new loan adds its payment to the borrower’s debt-to-income ratio. Each new loan also draws on the same asset pool, so a borrower planning several purchases has less room with every one.
Florida Carrying Costs: The Real Stress Test
Imputed income has to cover a payment, and in Florida that payment is heavy. Kiplinger reports that Florida leads the country in the most expensive HOA fees, citing Realtor.com data. It also notes that a retiree buying a home faces a property-tax reassessment instead of the 3% cap existing owners get.
Condo reserves add pressure. Yahoo Finance reports that starting January 1, 2026, associations can no longer waive or reduce reserves for building components covered by the structural integrity reserve study. Higher reserves usually mean higher dues, and dues sit in the housing payment.
Insurance quotes vary widely by source, so budget for the actual quote on the actual building, not an average.
A practical read: the same $25,000 of monthly qualifying income that carries a house in one market may stretch thin against a Florida condo with high dues and insurance. Run the whole housing payment against the imputed income before settling on a price. Ask for the condo’s budget and questionnaire early. Incomplete HOA questionnaires are a common reason these files stall.
What About a Rental? DSCR Is Usually the Better Tool
Asset depletion on the retiree’s own consumer loan is for principal residences and second homes, with an investment-property option on the depletion path at lower leverage. For a pure rental, DSCR is usually the cleaner fit. 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. The business-purpose exemption sits in Regulation Z section 1026.3.
DSCR qualifies primarily on property-level rental income covering the payment, subject to lender guidelines. The borrower’s personal income is not the test, and assets show up as reserves rather than imputed income. Select lenders in the network also offer programs below 1.00 coverage, with loan-to-value and terms adjusting accordingly.
The decision rule is simple. If rent covers the payment, DSCR keeps the retiree’s asset pool free for the next purchase. If rent falls short, as it can on a high-priced, low-rent property, asset depletion may carry an owner-used home or second home instead. Some retirees use both: asset depletion on the thin-rent home, DSCR on the rentals. Lendmire’s complete DSCR loans guide covers the rental side in full.
Key Terms Defined
- Asset depletion: A method that divides usable assets by 60 months to produce a monthly qualifying income.
- Asset qualifier: A path where eligible assets must cover the entire loan, with no income documented.
- Haircut: The share of an asset’s balance that does not count toward qualifying.
- Seasoning: The length of time funds must sit in an account before they count.
- Debt-to-income (DTI): Monthly debts, including the new housing payment, divided by monthly income.
- DSCR: Debt service coverage ratio, meaning the property’s rent compared with its full monthly payment.
Common Misconceptions
“It’s a no-doc loan.” No. Both paths document the assets, and ability to repay is reviewed from verified records. Income documentation is what drops away, not documentation.
“I have to sell my investments.” No. The balances are converted into notional income and stay invested.
“A $1.5 million portfolio means $1.5 million of income.” No. Haircuts, then the 60-month divisor, shrink the figure. The sanctioned example above turns $1,500,000 of usable assets into a monthly income figure that is only a small fraction of the balance.
“It works for any property.” Not on the qualifier path or the conventional route as described. Investment property is available only on the depletion path at lower leverage, and rentals usually fit DSCR better.
“Non-QM means subprime.” Not in this case. Verification of assets and collateral still applies, and trade press describes non-QM as roughly 5% of mortgage originations, with asset depletion programs named as a fit for retirees and wealth-based borrowers.
Tax treatment varies; consult a qualified professional before relying on any deduction or planning assumption.
Frequently Asked Questions
Can I use asset depletion while I’m still working?
Yes. On the depletion path, asset-derived income can supplement documented income up to a 45% debt-to-income ratio. When it supplements, the minimum-assets rule is waived. The program is not limited to retirees.
Do retirement accounts count if I’m not drawing from them?
Yes, under both paths, at different credit levels. The qualifier path counts a 401(k) or IRA at 90% under 59½ and 100% at 59½ or older. The depletion path counts retirement accounts at 70% at any age. Statements and seasoning rules still apply.
Can I use asset depletion on an LLC-owned rental?
Generally not on a consumer asset-based loan, since it tests the individual borrower. Entity vesting is typically a DSCR feature, subject to lender program eligibility. A rental owned through an LLC usually points to DSCR.
What if I hold crypto or precious metals?
Neither path publishes them as eligible.
Which path fits a Florida retiree with a second home?
It depends on the balance sheet. If liquid assets exceed the whole loan, the qualifier path avoids the income test. If assets are large but the loan is also large, the depletion path converts them to income.
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. Consumer mortgage lending is licensed in 16 states, including Florida, and programs are placed through select lenders in the network, subject to underwriting.
For a retiree weighing a Florida purchase, the deciding number is rarely the portfolio. It is the full monthly housing payment, set by insurance, dues and reserves, measured against whatever income the file can legitimately show.
Lendmire’s asset-based mortgage in Florida page presents the program for Florida borrowers.
About Lendmire
As a mortgage broker (NMLS# 2371349), Lendmire helps self-employed and high-net-worth borrowers in 16 states qualify on bank statements, a profit-and-loss statement, 1099s or liquid assets instead of traditional personal-income documentation, through wholesale lenders. Lendmire is never the lender; program terms are set by the lender and its guidelines. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
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References
1. Fannie Mae Selling Guide B3-3.4-06
2. Fannie Mae Announcement SEL-2026-02
3. Kiplinger, hidden costs of retiring to Florida
4. Yahoo Finance, retirees who bought in Florida sight unseen
5. Scotsman Guide, one out of 20 mortgages are non-QM
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 to Buy Before You Sell in Pennsylvania Using an Asset Qualifier Mortgage · How to Refinance a Florida Mortgage After Retiring With No W-2 Income · How to Buy Before You Sell in Alabama Using an Asset Qualifier Mortgage
Guides: Asset-Based Mortgage in Florida
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.