The Quick Read: Asset depletion income is a qualifying income figure a lender builds from your account balances: each eligible asset is counted at a set percentage, the usable total is divided by 60 months, and the result runs through the debt-to-income test against the new housing payment on a New Mexico home, through select programs and subject to underwriting.
- Nothing is sold or pledged. The division is a modeling step, and your accounts stay invested.
- Two paths exist. On the asset qualifier path, assets cover the whole loan and no income is documented. On the asset depletion path, assets become monthly income.
- Different assets count at different percentages. Cash counts in full, securities at 80%, and retirement accounts at 70% on the depletion path.
- The assets are always documented. Only employment and income paperwork is set aside.
- New Mexico does not change the math. The program figures are the same in every state.
What Asset Depletion Income Actually Is
Asset depletion income is a way of answering one question: if your balances were spread over a fixed number of months, how much would each month be worth? A lender uses that answer as income. It does this when your documented income is small or hard to show, but your balance sheet is large.
It is a qualification method, not a separate kind of loan. The mortgage is a normal consumer mortgage on a home. The method only changes how the lender measures your ability to repay.
Names vary. You will hear asset depletion, asset utilization, asset dissipation, and asset qualifier used loosely. Some are the same thing under a different label. Others are structurally different products. Across the wholesale network Lendmire works with, the two structures below are the ones that matter.
Two Paths, and You Qualify on One at a Time
The first path is the asset qualifier path. Your eligible assets, after the credit percentages below, must equal or exceed the entire loan amount. No employment or income is documented. The lender’s ability-to-repay review rests on the assets themselves.
The second is the asset depletion path. Eligible assets are discounted by haircuts, added up, and divided by 60 months. That monthly figure is your qualifying income. It must carry the full housing payment and your other debts through the debt-to-income test, which compares monthly debts to monthly income.
Never blend the two. The percentages, the seasoning, and the leverage differ by path. Every figure here names its path.
Which fits you? If your assets could cover the whole loan outright, the qualifier path is cleaner. If they cannot, but they are large enough to throw off a meaningful monthly figure, the depletion path is the one that works.
The Calculation, Step by Step
The depletion math runs in a fixed order. Here is how an underwriter treats it on the asset depletion path.
1. List the eligible accounts. Only accounts the program accepts go on the list. Ineligible ones are dropped before any math starts.
2. Apply the haircut to each balance. A haircut is the share of a balance the lender refuses to count. An 80% credit means a 20% haircut.
3. Remove funds already spoken for. Money used for the down payment and closing costs cannot also be counted as income-producing. The lender’s own calculation governs the exact treatment.
4. Add up the usable total. This is the pool.
5. Divide the pool by 60 months. The result is monthly qualifying income.
6. Add other documented income, if any. Social Security or a pension can sit alongside it.
7. Run the debt-to-income test. The housing payment and other monthly debts are compared with the combined income.
A worked example (illustrative only)
Run the numbers on a borrower holding securities and cash. The arithmetic is illustrative, and the lender’s own calculation governs.
- Securities held: $1,500,000, counted at 80%, which equals $1,200,000.
- Cash held: $300,000, counted at 100%, which equals $300,000.
- Usable assets: $1,500,000.
- Divided by 60 months: $25,000 of monthly qualifying income.
That $25,000 is not a payment cap. It is the income side of the test. The new housing payment and every other monthly debt must fit against it within the program’s debt-to-income limit.
What Counts, and at What Percentage
Every asset has a credit percentage. The table shows both paths side by side so you can see why the same balance produces different results.
| Asset type | Qualifier path | Depletion path |
|---|---|---|
| Brokerage / securities | 100% | 80% |
| Certificates of deposit | 100% | 100% |
| Savings and money market | 100% | 100% (cash accounts) |
| 401(k) and IRA | 90% under 59½, 100% at 59½+ | 70% at any age |
| Private stock | Not listed | 75% |
| Real-estate equity | Not listed | 60% |
Qualifier-path accounts combine, so brokerage, savings, and retirement balances add together. Figures are typical of select programs and subject to underwriting.
Here is the same idea on the qualifier path. Say you want an $800,000 loan. You hold $330,000 in brokerage accounts (100% counts, so $330,000), $300,000 in a 401(k) while under 59½ (90% counts, so $270,000), and $200,000 in savings (100% counts, so $200,000). That is $800,000 of usable assets, which matches the loan and is reviewed on assets alone. Again, this is illustrative.
Why retirement accounts get discounted
A retirement balance is not the same as spendable cash. Taking money out early carries a cost: the IRS generally charges a 10% additional tax on early IRA distributions, and “early” generally means before age 59½. Lenders discount accordingly. On the qualifier path the discount disappears at 59½. On the depletion path retirement accounts count at 70% regardless of age.
What does not count
On the depletion path, these are not eligible: 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. The lender then reviews where the money came from. Business accounts beyond your ownership share also fall outside the pool.
How the Divisor Moves the Result
The divisor is the most powerful lever in the formula. Double it, and you halve the monthly income. The same pool divided over a much longer stretch gives a far smaller number.
The network’s depletion path uses 60 months. Market surveys of other programs report longer divisors. Agency-style rules, meaning the guidelines Fannie Mae and Freddie Mac set for loans they buy, use a much longer period still. That is why agency asset income comes out far smaller than what a non-QM program produces. Those agency rules are a separate system and do not govern these files.
So when you compare asset-based offers, ask for the divisor and the haircut table together. A lender with a generous haircut and a long divisor can still produce less income than one with a harsher haircut and a short divisor. Only the full formula tells you.
Seasoning, Credit, and Minimums
Seasoning means the time money has sat in your accounts. It proves the funds are really yours.
- Qualifier path: 60 days of seasoning and two months of statements for each qualifying account.
- Depletion path: statements 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 credit, the qualifier path has a 600 minimum score. The depletion path follows the lender’s score and loan-amount matrix. 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. A housing event needs 4 years of seasoning on the depletion path.
The depletion path also has asset minimums. You need qualified assets of at least the lesser of $1,000,000 or 1.25 times the loan balance. If asset depletion is your only income, you need at least $250,000 liquid. When 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.
Leverage and Loan Size
Leverage differs by path and by what the property is. Read each figure with its label.
- Asset qualifier path: up to 80% loan-to-value on a purchase and 75% on a refinance, for a principal residence or second home. Loans reach up to $4,000,000. Whether cash-out is allowed on this path is set by the lender.
- Asset depletion path, principal residence or second home: up to 80% on a purchase or rate-and-term refinance, and 60% on a cash-out refinance.
- Asset depletion path, investment property: up to 65% on a purchase or rate-and-term refinance, and 60% on a cash-out. Loans run from $125,000 to $3,500,000.
Cash-out proceeds never count as qualifying assets. Reserves are not required on the qualifier path at or below 75% loan-to-value. Above that, the lender sets them. The depletion path has no published reserve months. These are ceilings and floors, never offers, and all are subject to underwriting.
Where the General Rule Breaks
The formula above is the common shape. Several edge cases bend it.
Asset income can supplement, not replace. If you have pension or Social Security income, the lender can add asset income on top, up to the 45% debt-to-income limit above.
Cash-out is tighter. Leverage drops on the depletion path, and the proceeds cannot be counted as assets. You cannot borrow against the home to prove you can borrow against the home.
Age matters on the qualifier path. A 401(k) counts at 90% before 59½ and 100% after.
Business money is not your money. Accounts a business needs to operate are commonly excluded. Programs vary here, so the lender’s guidelines decide.
Gifts and borrowed funds do not count. The lender looks for money that is yours and seasoned.
Unusual assets need conversion. Crypto and similar holdings become usable only after they sit as cash in a regulated account.
Rental income is a separate question. It does not feed the asset formula itself. If you are buying a rental, the better comparison is a DSCR loan, which qualifies primarily on property-level rental income covering the payment, subject to lender guidelines. Asset depletion looks at your balance sheet instead. Lendmire’s complete DSCR loans guide explains that alternative in full.
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 asset-based loans here are consumer mortgages, so consumer mortgage disclosures apply.
Common Mistakes
- Counting the same dollars twice. Money used for the down payment cannot also produce income.
- Using the face value of a retirement account. The percentage is lower, and it starts the math smaller.
- Assuming one national formula. Divisors, haircuts, and exclusions vary by program.
- Mistaking this for no documentation. Your income paperwork is set aside. Your statements are not.
- Forgetting the debt-to-income test. On the depletion path, income only matters against the payment.
- Assuming a large pool is enough. The pool also has to meet the minimum-assets rule.
Estimating Your Own Number
Do this before you apply. Pull your latest statements. Sort accounts into eligible and ineligible. Apply the path’s percentages. Set aside what the down payment and closing costs will need. Divide the rest by 60 for the depletion path, or compare it to the loan amount for the qualifier path. That gives you a rough read. The lender’s calculation is what counts.
New Mexico Considerations
New Mexico does not change how the income is calculated. The program figures are identical across states. Lendmire’s consumer mortgage lending is licensed in 16 states, New Mexico among them, so a New Mexico borrower can request a comparison.
State facts like local prices or insurance shape the property side of the file, not the qualifying math. If the property is short-term rental collateral, rules vary by city, county, HOA, and property type, so confirm local rules before relying on projected rental income.
Key Terms Defined
Asset depletion income: a monthly qualifying income figure created by dividing usable assets by 60 months.
Haircut: the share of an account balance the lender will not count.
Seasoning: the length of time money has been in your account.
Debt-to-income ratio: your monthly debts divided by your monthly income.
Asset qualifier path: the structure where eligible assets must cover the entire loan and no income is documented.
Usable assets: the total left after each balance has been discounted by its credit percentage.
Frequently Asked Questions
Do I have to sell my investments to use them?
No. Your accounts stay invested and nothing is pledged as collateral. The property secures the loan. The lender only models the balances as income, and your statements are reviewed for ownership and seasoning.
Can retirement accounts count toward the calculation?
Yes, at a discount. 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. Tax treatment varies; consult a qualified professional.
Can I mix asset income with other income?
Yes, in some cases. Asset-derived income can supplement documented income, such as a pension, up to a 45% debt-to-income ratio. When it supplements, the minimum-assets rule is waived, subject to underwriting.
Does this work for an investment property?
Only on the depletion path, and with lower leverage: up to 65% on a purchase or rate-and-term refinance and 60% on a cash-out refinance, through select programs. Business-purpose rental financing is usually a DSCR conversation instead.
What documents will I need?
Account statements for every counted account, with the statement ages the path requires. Large or recent deposits need an explanation. Employment and tax paperwork is not part of the file, but the assets are fully documented.
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. Lendmire is a broker, so each file is placed with select lenders and underwritten individually. For a closer look at how the divisor shifts when other obligations come into play, see Lendmire’s explanation of how residual income shifts the divisor on an asset depletion mortgage.
For current guidelines and terms, see Lendmire’s asset-based mortgage programs page.
Lendmire’s asset-based mortgage in New Mexico page presents the program for New Mexico borrowers.
About Lendmire
Lendmire (NMLS# 2371349) is a mortgage brokerage serving self-employed and high-net-worth borrowers in 16 states. Bank statement, P&L-only, 1099-only and asset-based mortgages are arranged through wholesale lending channels; Lendmire brokers the financing and the lender underwrites each application. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
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References
1. IRS Tax Topic 557, Tax on Early Distributions from IRAs
2. eCFR 12 CFR 1026.3, Exempt Transactions
This article is part of Lendmire’s asset-based mortgage program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: Can You Get an Asset Depletion Mortgage After a Foreclosure or Short Sale? · How Much of a 457 Plan Counts Toward Asset Depletion Income? · Asset Depletion Income Formula and Haircuts
Guides: Asset-Based Mortgage in New Mexico
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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Disclosures. The information presented in this article is general market commentary, not financial, legal, or tax advice. Lendmire is a mortgage brokerage (NMLS# 2371349) — not a direct lender or depository institution — and loan placement is subject to lender underwriting. Nothing in this content represents a commitment to lend. Loan terms, pricing, and program availability vary based on borrower qualifications, property characteristics, and state of subject property, and are subject to change at any time. Lendmire complies with Equal Housing Opportunity requirements. Consumer access: nmlsconsumeraccess.org.