Asset Depletion Loans In Crested Butte — The Quick Read: These loans let a borrower turn a liquid portfolio into qualifying income instead of relying on traditional personal-income documentation or a paycheck. A lender divides eligible assets by a set number of months to produce a monthly income figure, then underwrites the file like any other mortgage. The math sounds simple, but the divisor, the haircuts, and the eligible asset list vary widely from one program to the next — which is exactly why this loan type confuses so many borrowers who assume there’s one universal formula.
This piece works the same way no matter where the property sits. The mechanics below apply nationally, through select lenders in Lendmire’s wholesale network, not to one town’s housing stock.
Key Takeaways
- Asset depletion converts liquid assets into a monthly qualifying-income figure — it does not require you to sell or withdraw anything.
- Retirement accounts get a haircut and, on some programs, an age-based eligibility line tied to the IRS’s 59½ rule.
- Business equity, real estate equity, unvested stock, and crypto generally don’t count toward the eligible pool.
- Through select lenders in Lendmire’s wholesale network, asset-based qualification runs on divisors of 36, 60, or 84 months, plus a separate assets-only path with no DTI calculation at all.
- Asset depletion and DSCR loans solve different problems — one converts your balance sheet into income, the other lets a rental property’s own cash flow carry the file.
Key Terms Defined
Asset depletion (or asset dissipation): an underwriting method that converts a borrower’s liquid assets into a hypothetical monthly income stream, used instead of — or alongside — wage or tax-return income.
Divisor: the number of months a lender divides your eligible asset total by to produce that monthly income figure. A shorter divisor produces more monthly income from the same asset pool; a longer one produces less.
Haircut: a percentage reduction applied to certain asset types — most often retirement accounts — before they’re counted in the eligible pool, meant to account for taxes, penalties, or volatility.
Reserves: liquid funds a borrower must have left over, above the money used for closing and down payment, to cover a set number of months of housing costs after the loan closes.
DTI (debt-to-income ratio): the share of a borrower’s monthly income — including any asset-depletion income — that goes toward debt payments.
How Underwriting Actually Treats Your Assets, Step by Step
The process runs in a fixed sequence, even though the numbers behind each step differ by lender. Here’s the order every asset-depletion file follows.
Step 1: Identify eligible assets. Checking, savings, money market accounts, CDs, brokerage holdings, and retirement accounts typically qualify. Business bank accounts, real estate equity, and most closely held business interests do not — a distinction the OCC Bulletin 2019-36 frames around what it calls “eligible assets of applicants,” leaving each institution to define its own eligible list within that framework.
Step 2: Apply haircuts by asset type. Cash-type holdings usually count near full value. Retirement accounts get discounted because withdrawing from them early triggers tax consequences. Through select lenders in Lendmire’s wholesale network, retirement funds count at 70% of value, or 80% once the account holder is 59½ or older — the age at which the IRS stops applying its 10% additional tax on early distributions.
Step 3: Subtract what’s already spoken for. Before any asset gets converted into income, the pool gets reduced by the funds needed for down payment, closing costs, and required reserves. Skip this step and the qualifying-income number comes out inflated — a mistake that shows up again and again in files that get kicked back for rework, a pattern the Truss Financial Group analysis flags as one of the more common borrower errors on age- and asset-related calculations.
Step 4: Divide by the program’s divisor. This is where the real variation lives. Through select lenders in Lendmire’s wholesale network, the asset-allowance path uses a 36-month divisor when it’s layered on top of other income and the borrower’s DTI sits at or below 60%, a 60-month divisor when DTI runs above that, or an 84-month divisor when the asset income stands alone or the loan amount exceeds $3,500,000. A shorter divisor produces more monthly income from the same pool. It’s not automatically the better deal — a shorter divisor usually comes with a different risk profile and different program terms attached.
Step 5: Feed the result into a normal file. On the asset-allowance path, that monthly figure gets added to the file’s income and DTI gets calculated the usual way, up to 50% on most programs in the network. On the assets-only path, income and DTI disappear from the equation entirely — the borrower instead needs liquid U.S. assets equal to the loan amount, plus closing costs, plus 60 months of any net loss on other owned real estate.
The Structures and Variations That Actually Exist
There isn’t one “asset depletion loan.” There are at least three distinct structures, and mixing them up is the single most common source of borrower confusion.
Asset allowance (supplemental income). This is the most common structure. It layers a modeled income figure on top of whatever wage or self-employment income already exists, using the 36- or 60-month divisor depending on DTI. It’s a boost, not a replacement.
Asset allowance (standalone). Same math, different role — the asset income becomes the only income source on the file, run through the 84-month divisor. This is the path most people picture when they hear “asset depletion.” Both asset-allowance structures cap out at 80% loan-to-value and apply only to primary residences and second homes, not investment property.
Assets-only. No DTI, no income calculation at all — just a liquidity test. The borrower needs U.S.-based liquid assets covering the full loan amount plus costs. This structure exists for borrowers whose balance sheet is so strong that modeling income feels almost beside the point.
Leverage on any of these paths steps down as loan size climbs. On a primary residence, purchase leverage through select lenders in the network runs as high as 90% up to $1,000,000, tapering to 85% through $1.5,000,000, 80% through $2.5,000,000, and down into the 60%-65% range once a loan crosses $4,000,000 — every figure above that size reviewed case by case before submission, never a flat “up to” number. Second homes and investment properties run roughly five points lower across the same bands.
Some borrowers get their income through bank deposits instead of a portfolio. For them, there’s a different way to document income: 12 or 24 consecutive months of bank statements. Lenders divide eligible deposits by the statement period, after applying an expense ratio. That ratio varies by staffing level and business type, and it rises as employee count or product-based operations increase, per lender program guidelines. Transfers from a borrower’s own business into a personal account count at full value, not the reduced ratio. This bank-statement approach is a different tool from asset depletion. But the two often show up in the same borrower’s file. This is especially true for a business owner who sold a company and now holds fresh liquidity along with a thin final year of tax-return income.
Where the General Rule Breaks
Every asset-depletion rule has an exception, and knowing them ahead of time prevents a file from stalling mid-underwriting.
The 59½ line is harder than a haircut on some programs. Certain lenders don’t just discount a retirement account below that age — they exclude it from the eligible pool altogether. Through select lenders in Lendmire’s wholesale network, the treatment is a haircut (70% under 59½, 80% at or above), not an outright exclusion, but that’s a program-specific choice, not an industry standard. Always confirm which treatment applies before assuming a 401(k) balance will convert into income at all.
Cash doesn’t carry the same age logic. Checking, savings, money market funds, and CDs don’t have an early-withdrawal penalty standing between the borrower and the money, so age-based haircuts generally don’t apply to them the way they do to retirement accounts.
Vested and accessible matters more than the balance. A large 401(k) balance that isn’t vested, or a retirement plan the borrower can’t currently withdraw from, generally doesn’t count — the account has to be verified as accessible regardless of current employment. Unvested stock options and restricted stock units are almost universally excluded for the same reason: the asset isn’t the borrower’s yet.
Business equity kills files, not just discounts them. Treating a business ownership stake, closely held stock, or real estate equity as a qualifying asset is a common and avoidable mistake — none of it counts. Only assets the borrower can access personally and immediately go into the eligible pool.
Loan size above $4,000,000 changes the process, not just the leverage. Once a file crosses that threshold, every parameter — leverage, documentation depth, reserve requirements — gets reviewed case by case before it’s ever submitted to a lender. That’s true across the primary, second-home, and investment ladders alike, and it’s worth planning for up front rather than discovering mid-file. Final terms depend on lender guidelines, property type, leverage, and the borrower’s complete credit picture.
Super-jumbo files carry their own overlay stack. Above $3,500,000 on a primary residence, or $3,000,000 on a second home or investment property, expect a 700 credit floor, a clean 0x30x24 housing-payment history, 48-month seasoning on any credit event, and no non-occupant co-borrowers. Cash-out proceeds also can’t be used to satisfy reserve requirements at that size — the reserves have to already exist, separate from what the loan produces. These specifics are subject to lender guidelines and a full review of property, leverage, and credit.
Asset Depletion vs. DSCR: Two Different Tools
Real estate investors sometimes assume asset depletion is the path to a rental purchase. It usually isn’t. Asset depletion converts a personal balance sheet into personal qualifying income. The two asset-allowance structures apply only to a primary residence or a second home, not an investment property.
For a rental purchase, the property’s own income typically carries the file instead. Lendmire’s complete DSCR loans guide covers how that qualification works. A lender compares the property’s rent against its full monthly obligation. Lenders look for coverage at or above roughly 1.00x on most programs. That’s a select-program floor, not a universal one. Select lenders in the network will consider coverage below that threshold, with adjusted leverage and terms.
That doesn’t mean the liquid portfolio goes to waste on a rental file. It usually shows up as reserves instead. Reserves are the buffer a lender wants sitting untouched after closing. The required amount generally rises alongside loan size, and adds extra coverage for each other financed property, up to a set cap. First-time investors often see a flat reserve requirement regardless of loan size. The same brokerage account that could convert into income on a primary-residence asset-depletion file instead becomes the compensating factor that strengthens a rental purchase’s DSCR file.
This is also why an investor who’s exited a business — flush with cash, thin on recent tax-return income — often runs two completely different underwriting paths on two purchases in the same year. One is asset depletion, on the house they’ll live in. The other is a rental-income calculation, on the duplex down the street. The balance sheet supports both files, just in different roles.
The Investor Decision: What This Actually Looks Like in Practice
The choice usually comes down to what the property is for and what the liquidity is doing. A borrower buying a primary residence or second home with a large liquid portfolio and thin recent income has a real decision to make. They can choose between the asset-allowance and assets-only structures. The divisor difference between them — 36, 60, or 84 months — can swing the qualifying-income figure enough to change what loan size is realistic.
An investor buying a rental property with that same portfolio usually isn’t choosing between asset depletion structures at all. The property’s rent drives the qualification instead. The portfolio’s job shifts to satisfying reserves. Confusing the two products is a common and avoidable mistake. So is assuming a brokerage account will convert into income on a rental purchase the same way it might on a personal residence. This trips up investors who are structuring multiple purchases at once. Also watch cash-out limits on either path. Through select lenders in Lendmire’s wholesale network, cash-out proceeds run uncapped at or below 60% LTV. Above that leverage point, they cap at $1,500,000 in cash-in-hand on the portfolio program.
Somewhere between $300,000 and $30,000,000 in loan size, through two separate wholesale ladders — a portfolio non-QM program running to $6,000,000 and a bank portfolio program carrying twelve-month-statement files to $30,000,000 at 65% through $5,000,000, 60% through $10,000,000, and 55% through $30,000,000 — there’s usually a structure that fits a given asset picture. The honest answer for any specific file, though, is that it depends on the borrower’s age, account types, loan size, and property use, reviewed individually rather than plugged into a single formula.
Frequently Asked Questions
Do I have to withdraw or sell my investments to use asset depletion?
No. The assets stay invested. The lender is only calculating a hypothetical income stream from the balance — it’s a qualification method, not a spending requirement.
Can I use asset depletion to buy a rental property?
Generally, no — the asset-allowance structures apply to primary residences and second homes, not investment property. On a rental purchase, the property’s own rental income typically drives qualification through a DSCR calculation instead, with the liquid assets often supporting the file as reserves.
What happens to my retirement account if I’m under 59½?
It usually still counts, but at a lower haircut than it would above that age — 70% versus 80% through select lenders in the network — reflecting the tax consequence of an early withdrawal under IRS rules. Some lenders exclude a retirement account below that age entirely, so confirm the treatment before assuming eligibility.
Is there one standard formula every lender uses?
No. The divisor, the haircuts, and even the eligible asset list vary from program to program — there’s no single industry-wide formula, which is exactly why the same asset pool can qualify for very different loan amounts depending on where the file goes.
What doesn’t count toward the eligible asset pool?
Business bank accounts, real estate equity, unvested stock or restricted stock units, and cryptocurrency generally don’t count. Only personal liquid assets the borrower can access without penalty go into the calculation.
If you’re weighing whether asset depletion, a bank-statement path, or a DSCR structure fits your next purchase, Lendmire can help you compare the options based on the property, the balance sheet, and your goals as an investor.
Investors who want the broader program framework can review how DSCR loans work.
For current guidelines and terms, see Lendmire’s super jumbo bank statement loan programs page.
Self-employed borrowers can compare both super jumbo programs on Lendmire’s self-employed mortgages page.
About Lendmire
Lendmire (NMLS# 2371349) is a mortgage brokerage focused on DSCR investor financing, helping arrange programs through wholesale and investor-lending channels in 40 markets, including Washington, D.C. DSCR loans are evaluated by the lender on property cash flow rather than personal income, subject to lender guidelines, supporting LLC closings and accommodating investors with four or more financed properties. Scotsman Guide Top Mortgage Workplace in both 2025 and 2026.
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References
1. OCC Bulletin 2019-36 — Asset Dissipation Underwriting
2. IRS Topic 558 — Additional Tax on Early Distributions
3. Truss Financial Group — Fannie Mae Asset Depletion Formula
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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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.
