Asset Depletion Loans In Hilton Head Island — The Quick Read: An asset depletion loan lets a borrower qualify using liquid assets instead of pay stubs or traditional personal-income documentation. A lender divides eligible assets by a set number of months to create a monthly qualifying-income figure. The divisor a program uses — not the size of the portfolio — usually decides whether a file gets approved. This method qualifies the borrower, not the property, so it works alongside, not instead of, a DSCR loan on a rental purchase.
Coastal second-home and retirement markets attract a specific kind of buyer: someone with real wealth and a thin tax return. A retiree living off a brokerage account. A business owner who just sold a company. A high-net-worth buyer whose income sits in investments, not a paycheck. Traditional mortgage underwriting struggles with all three, because it’s built around W-2s and adjusted gross income. Asset depletion exists to fix that mismatch.
Key Terms Defined
Asset depletion (or asset dissipation): An underwriting method that converts a borrower’s liquid assets into a hypothetical monthly income figure, used instead of or alongside employment income.
Divisor: The number of months a lender divides total eligible assets by to produce the monthly qualifying-income figure. A shorter divisor produces a bigger monthly number from the same asset pool.
Haircut: A discount applied to certain asset types — retirement accounts, brokerage holdings — before they count toward the depletion calculation, because those assets carry price volatility or early-withdrawal penalties.
Seasoning: The length of time funds must sit in an account before a lender will count them, meant to screen out last-minute deposits or borrowed funds.
DSCR (debt service coverage ratio): A property-level test comparing a rental property’s income to its own monthly obligation, used on investment-property loans instead of the borrower’s personal income or assets.
How the Math Actually Works
The core formula is simple. Take total eligible liquid assets. Subtract any funds earmarked for the down payment and reserves. Divide that by a program’s divisor. The result is monthly qualifying income. This number gets added to documented income on the loan file — or sometimes it stands in for that income entirely.
The federal basis for this practice is narrow but real. What the rule does not do is hand down a formula. It confirms assets are a legitimate repayment source and stops there. Every divisor, every haircut percentage, every seasoning window past that point is a private underwriting decision made program by program.
That’s why two lenders looking at the identical asset statement can arrive at wildly different qualifying-income numbers. A shorter divisor stretches the same dollar further. A longer one shrinks it. Neither is wrong — they’re just different risk appetites baked into different products.
Which Assets Count — and What Gets Cut
Not every dollar in a brokerage account counts the same. Liquid, stable holdings — checking, savings, money market accounts — typically count in full. Retirement accounts and brokerage holdings usually take a discount, because they carry withdrawal penalties, tax consequences, or price swings that make them less reliable as a repayment source.
Across the wholesale network Lendmire works with, retirement funds generally count at 70% of their value. That rises to 80% once the account holder turns 59½ or older and can access the funds without penalty. Business funds, gifts, trusts other than a revocable living trust, unvested stock, and cryptocurrency typically don’t count at all through these programs. They’re either too illiquid, too easy to manufacture on paper, or too volatile for a lender to model as a repayment stream.
Funds already committed to the down payment, closing costs, and required reserves come off the top before the depletion math runs. That prevents the same account balance from getting credited twice — once for closing, once for income.
Step by Step: What Underwriting Actually Does
1. Verify the assets. Statements are pulled for every account being used, typically covering several recent months so the lender can confirm the balance is real and stable, not a one-time deposit.
2. Apply haircuts by asset type. Cash counts in full. Retirement and brokerage accounts get discounted based on the rules above.
3. Subtract what’s already spoken for. Down payment, closing costs, and post-closing reserves come out of the pool first.
4. Divide by the program’s divisor. Across select lenders in Lendmire’s wholesale network, the asset allowance path uses 36 months when combined with other income and debt-to-income sits at or below 60%, 60 months when debt-to-income runs above that threshold, or 84 months when the loan stands on assets alone or exceeds $3,500,000.
5. Add the result to other qualifying income, or in an assets-only structure, let it stand on its own — provided the borrower’s U.S. liquid assets equal the full loan amount plus closing costs plus sixty months of any net loss carried on other residential property.
Nobody has to sell anything to make this work. The word “hypothetical” in the CFPB’s underwriting factors matters here — the lender models what the assets could produce as income. The portfolio stays invested.
The Sizes and Leverage Involved
Loan sizes run from roughly $300,000 to $30,000,000 across two wholesale channels: a portfolio non-QM program carrying files to $6,000,000, and a separate bank portfolio program that carries twelve-month bank-statement files to $30,000,000 on its own size ladder — 65% loan-to-value to $5,000,000, 60% to $10,000,000, and 55% up to $30,000,000, with interest-only capped at 60% or the band’s ceiling, whichever is lower. That larger ladder is a documented-deposit product, not an asset-depletion product, and it’s worth knowing about mainly as an alternative for a buyer whose deposit history tells a cleaner story than their asset statement does. The CFPB’s Ability-to-Repay rule requires lenders to weigh eight underwriting factors before approving a mortgage, and current or reasonably expected assets sit right alongside income, employment, and debt obligations on that list.
For the asset-based paths specifically — the ones that qualify a borrower on assets alone — leverage caps at 80% loan-to-value regardless of loan size. This product applies only to primary residences and second homes. That 80% ceiling matters even on smaller loans. For comparison, the general leverage ladder for a bank-statement or documented-income file might otherwise run as high as 90% on a primary residence under $1,000,000. A buyer qualifying through the asset allowance or assets-only path doesn’t get that higher number. The tradeoff for skipping income documentation entirely is a firmer leverage ceiling.
On the broader documented-income leverage ladder for a primary residence, terms step down as loan size climbs: 90% to $1,000,000, 85% to $2,000,000, 80% to $3,000,000, 75% at the top credit tier to $4,000,000, then case-by-case review through $6,000,000, and finally the bank program’s own ladder above that. Second homes typically run about five points lower at each size band, and the specific figures for a given file depend on credit score, reserves, and full underwriting review — never a flat number quoted in advance. Anything above $4,000,000 gets reviewed case by case before it’s even submitted.
Credit requirements sit at a 660 floor on the portfolio program (680 on the bank-statement program), stepping up to a 700 floor above the super-jumbo threshold — $3,500,000 on a primary residence, $3,000,000 on a second home. Reserve requirements scale with loan size too: three months of payments held in reserve up to $500,000, six months up to $1,500,000, and nine months above that, plus additional months for every other financed property a borrower carries. Terms vary by lender guidelines, property type, leverage, credit profile, and full file review.
Conforming asset depletion is a different, far more conservative animal, and it’s useful mainly as a contrast point. Even after that change, an 180-month divisor is dramatically more conservative than the 36-to-84-month range common across non-QM programs. Dividing the same asset balance by 180 months instead of 60 produces roughly a third of the monthly qualifying income. That price-to-income gap is the entire reason most asset-rich, income-light buyers end up in a non-QM lane rather than a conforming one — the agency math simply doesn’t credit their portfolio the same way.
Asset Depletion Isn’t a DSCR Substitute
Here’s a mistake worth flagging directly: asset depletion qualifies the borrower personally. It has nothing to do with whether a rental property’s own income covers its own payment. A DSCR loan works the opposite way. It qualifies primarily on whether the property’s rental income covers the payment, subject to lender guidelines. This approach largely sets the borrower’s personal income and assets aside, except for reserves and the down payment. DSCR loans are built for non-owner-occupied investment properties. Because they are business-purpose investor loans, lenders review them differently than a standard owner-occupied mortgage.
An investor buying a rental property in a coastal vacation market and planning to use short-term rental income to support the file is almost always better served by looking at a DSCR structure, not a personal asset-depletion path. Lendmire’s complete DSCR loans guide walks through how that property-income test works in more depth. Asset depletion becomes the right tool specifically when the purchase is a personal, non-business-purpose loan — a second home, most often — and the buyer wants their portfolio, not their tax return, to carry the file.
There’s a related appraisal wrinkle worth knowing about if you’re weighing both paths on a vacation-rental-heavy property. When a lender uses rental income to qualify an investment property, appraisers typically rely on Fannie Mae’s Form 1007 rent schedule. That form was built around monthly leases. So it’s a documented error to take a nightly short-term-rental rate, multiply it by thirty, and call that the market rent. McKissock’s appraisal-education guidance is explicit that assessing business income sits outside the scope of that form. This mismatch is one more reason DSCR files on short-term rental properties often lean on platform booking data instead of a standard rent schedule. It has nothing to do with the asset-depletion process discussed here.
Lendmire’s team sees many files where a buyer is weighing both routes. The deciding question is almost always occupancy and purpose. Will the borrower live in this home? Or is the property meant to produce rental income on its own? Personal occupancy points toward asset depletion or bank-statement income. A pure rental purchase points toward DSCR nearly every time. That’s because the property’s own cash flow tells a cleaner story to underwriters than a personal portfolio ever will.
Who This Actually Fits
- A retiree drawing minimal pension or Social Security income but holding a substantial brokerage or retirement portfolio.
- A business owner who recently sold a company and has fresh liquidity but no current W-2 or business tax return to show.
- A self-employed borrower whose traditional personal-income documentation are optimized for deductions and understate real cash flow.
- A high-net-worth buyer between jobs or transitioning careers who doesn’t want to interrupt investment positions to fund a home purchase.
- A buyer purchasing a second home who wants underwriting to reflect actual net worth rather than a documented paycheck.
Where Licensing Applies
Lendmire’s consumer mortgage lending covers 16 states: Alabama, California, Colorado, Florida, Georgia, Indiana, Michigan, Montana, New Mexico, North Carolina, Ohio, Pennsylvania, Tennessee, Texas, Virginia, and Washington. South Carolina is not on this list. Say you’re buying a home in a market like Hilton Head Island and want a personal, owner-occupied asset-depletion loan. You should confirm licensing is available there first — don’t just assume it applies. Business-purpose investment-property files work differently. These typically go through Lendmire’s broader wholesale DSCR network instead of this consumer lending footprint. This is an important difference to understand before shopping either program, since the two paths solve entirely different loan purposes. Investors comparing the two structures can also check how Lendmire’s asset-depletion coverage of other Atlantic coast markets frames the same underwriting logic for a different second-home market.
Tax treatment can depend on how the funds are used and how the property is held; investors should keep clear records and speak with a qualified tax professional before relying on any deduction.
Frequently Asked Questions
Do I have to liquidate my portfolio to qualify this way?
No. The lender models what the assets could produce as monthly income; nothing gets sold or cashed out to make the math work. The portfolio stays exactly where it is unless the borrower chooses otherwise.
Can I combine asset depletion with Social Security or pension income?
Generally yes. The asset allowance path is designed to supplement other documented income, not always replace it entirely, and combining sources is common for retirees who have some fixed income plus a substantial portfolio.
What happens if my portfolio value drops after closing?
Typically nothing changes on an existing loan. The depletion calculation is a point-in-time underwriting snapshot at origination, not an ongoing requirement to maintain a balance, though a future refinance would require fresh statements.
Is asset depletion the same thing as a DSCR loan?
No, and confusing the two is the single most common mistake investors make. Asset depletion qualifies the person; DSCR qualifies the property’s own rental income against its own payment. Rental property investors researching a purchase should look at Lendmire’s guide to bald head island asset-depletion structures for how the two paths sometimes intersect on second-home-adjacent purchases.
Does one lender’s divisor apply everywhere?
No. Divisors, haircuts, and seasoning periods are set individually by each program, and there’s no regulatory formula requiring uniformity. A buyer should always confirm the specific divisor and asset treatment a given file will use before assuming a number holds across lenders.
If you’re weighing whether a personal asset-based structure or a property-income DSCR loan fits your purchase better, Lendmire can help compare the options based on your assets, credit profile, leverage needs, and the property itself.
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 DSCR-focused mortgage broker that helps arrange investor financing across 40 markets, including Washington, D.C., through wholesale and investor-lending channels. DSCR eligibility is generally reviewed by the lender around the property’s rental income rather than personal income documentation, subject to lender guidelines — which works for self-employed investors, LLC operators, and portfolios above four financed properties. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
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References
1. CFPB — Ability-to-Repay Rule Summary
2. McKissock Learning — Form 1007 and Short-Term Rental Appraisals
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.
