How Asset Depletion Mortgage Eligible Assets Work on a Jumbo Loan

The Quick Read: Asset depletion lets a jumbo lender convert verified liquid assets into qualifying monthly income on a large loan, but it counts only what is eligible after discounts, down payment, closing costs, and reserves come out, and nothing you hold is ever sold, frozen, or pledged to the lender. The result is a calculated income figure, not a withdrawal plan. How large that figure gets depends on the asset mix and on the lender’s program.

• Cash counts at or near full value. Securities and retirement accounts are discounted.
• Down payment, closing costs, and reserves come out of the pool before income is calculated.
• The divisor, meaning the number of months the pool is spread over, drives the outcome more than any other input.
• Equity in real estate and borrowed funds do not count.
• Some programs add the calculated income to documented income and run a debt-to-income test. Others only test liquidity.

Key Terms Defined

Eligible assets: The accounts a lender will count toward qualifying, usually cash, brokerage holdings, and retirement funds the borrower can access.

Haircut: The discount a lender applies to an asset for volatility, taxes, or withdrawal costs before counting it. In finance generally, the more volatile the asset, the larger the discount.

Divisor: The number of months the counted pool is spread across to produce monthly income. A longer divisor produces less income from the same pool.

Assets-only path: A program that skips the income calculation and instead requires liquid assets to cover the loan and costs.

DTI: Debt-to-income ratio, which compares monthly obligations to qualifying monthly income.

How Asset Depletion Works on a Jumbo Loan, Step by Step

The mechanics follow one sequence at nearly every lender in the wholesale network, though the numbers inside it change from program to program. The formula in plain words: eligible assets after discounts, minus funds already committed, divided by the program’s divisor, equals monthly qualifying income.

1. Gather the full pool. Checking, savings, money market, brokerage, and accessible retirement accounts go on the list. Equity in real estate does not.

2. Apply haircuts by asset type. Cash is counted at or near full value. Securities are discounted because prices move. Retirement funds are discounted for taxes and withdrawal costs.

3. Subtract committed funds. The down payment, closing costs, and required reserves come out first.

4. Divide by the program’s divisor. This step is the biggest swing factor in the whole process.

5. Use the result. Some programs add the calculated income to any documented income and run a standard DTI. Others use a liquidity-only test.

6. Underwrite everything else. Credit, mortgage history, the appraisal, and reserves are all still reviewed.

Step six surprises people. Asset depletion changes how income is calculated. It does not switch off underwriting. The loan still is reviewed on documented income under the applicable program, subject to lender guidelines, and the borrower’s credit and payment history still matter.

Jumbo files add one wrinkle. Loan sizes on this lane run roughly $125,000 to $3,500,000, so the pool needed to support the loan gets large quickly in the arithmetic, and lenders pay close attention to what remains liquid after closing. Reserves commonly run around six months of the housing payment on most programs.

Which Assets Count, and Why

Liquid, accessible, verifiable assets count. Illiquid, borrowed, or restricted ones do not. The table shows how most programs we place files with treat each category, without quoting any single lender’s percentages, because those differ.

The ineligible list is just as important:

• Equity in the subject property or other real estate.
• Funds borrowed against another asset.
• Business operating accounts, unless the program allows them and ownership is clear.
• Gifts not yet documented, and unvested stock compensation.
• Collectibles and similar hard-to-value holdings.

Some consumer finance explainers, including Benzinga’s overview of asset depletion mortgages, list real estate among eligible asset types. That does not match how most programs in the network work. Plan on real estate equity counting for nothing.

Retirement Accounts, Trusts, and Crypto

These three categories are where eligible-asset questions get specific, and where the rules differ most from lender to lender.

Retirement accounts are a common source of confusion. Treatment can depend on the borrower’s age, the account type, and whether the funds are vested and accessible. Some programs count a 401(k) differently from an IRA. Others only count the account once the borrower reaches a certain age. Lendmire’s explainer Asset Depletion Mortgage Rules for Retirement vs Liquid Assets walks through that split in more detail.

Trust-held assets can count when the borrower has clear access to them and the trust documents support it. Ownership has to be provable on paper. A separate piece covers how trust assets can be used to qualify.

Crypto is program-dependent. Some lenders will consider it with a heavy discount and seasoning. Many will not count it at all. Ask before assuming it belongs in the pool.

One Pool, Several Jobs

The same dollar cannot do two jobs. Every dollar used for the down payment, closing costs, or reserves leaves the pool before the divisor is applied. Borrowers who miss this overestimate what they can borrow.

An index example makes the point without dollars. Say a borrower’s eligible pool, after haircuts, is 100 units. The down payment, closing costs, and reserves take 30 units, which leaves 70 units to divide by the program’s divisor. Now say the borrower puts more down, and committed funds rise to 45 units. Only 55 units remain, so income capacity falls by roughly a fifth, from 70 to 55.

The divisor works the same way in reverse. The same 70 units divided over a period twice as long produces half the monthly income. That is why two lenders can look at identical statements and reach very different answers. Before choosing a product, ask which guidelines the file will be underwritten against.

Some programs ask that assets also satisfy reserves. On those, the reserve requirement comes out of the pool before income is calculated. Others treat reserves as a separate hurdle. The file structure changes accordingly. Terms depend on the lender’s guidelines, the property type, the leverage, and a full review of the credit profile.

Two Paths: Income Conversion or Assets-Only

Jumbo files usually follow one of two routes. The first converts assets into income and then runs a normal DTI. The second skips the DTI and tests whether liquid assets can cover the loan and costs.

Income conversion tends to suit borrowers who also have pension, Social Security, or other recurring income, because the program may allow that income to be added on top. Assets-only suits borrowers with very large balances and little regular income. Some assets-only programs also want assets to cover a multi-month shortfall on other property the borrower owns.

If your portfolio is large but your documented income is lumpy or tax-optimized, either path may fit. If your holdings are moderate and your income is solid, a standard jumbo or a bank-statement program may be simpler.

Why the Same Assets Produce Different Results at Different Lenders

Each lender writes its own program. The rules do not come from a single formula. Across the wholesale network, the divisor, the haircut schedule, the treatment of retirement funds, and the reserve rules all vary.

Agency-style methods use different logic and often a much longer depletion period. They are a separate world from non-QM products, and jumbo files generally run through non-QM programs. Do not use agency material to predict how a non-QM program will treat your accounts.

The strictest overlays want long seasoning on large deposits, tight documentation, and conservative asset discounts. More flexible programs count more asset types. Loan size changes treatment too, because lenders review very large loans more closely. A broker who sees many programs can match a file to the lender whose rules fit the asset mix. A single lender can only show you its own.

Occupancy and Transaction Type

Occupancy decides both what is allowed and which disclosure regime applies. An owner-occupied file, meaning a primary residence or second home, is a consumer mortgage, so TRID disclosures apply. A loan on a non-owner-occupied rental, including a short-term rental, is business-purpose and exempt from TRID. Keep the two straight, because they follow different rules.

Many jumbo asset depletion programs allow only primary and second homes. Investment-property eligibility depends on the program, so do not assume this kind of loan can finance a rental. Leverage by transaction looks like this on the programs described here, always subject to lender guidelines:

• Primary residence, qualifying from liquid assets: up to about 80% LTV.
• Primary residence, bank-statement purchase or rate-term: up to 90% LTV through select lenders, with the top of the range reserved for stronger files.
• Owner-occupied cash-out (primary or second home): up to 80% LTV on bank-statement programs, by loan size and credit.
• Investment-property cash-out: tops out around 75% LTV.

Cash-out proceeds are generally not counted as eligible assets. Some programs allow proceeds to satisfy reserves, and others do not. On certain programs above the super-jumbo line, cash-out cannot count toward reserves.

An investor holding a rental has another route. A DSCR loan is reviewed primarily on property-level rental income covering the payment, subject to lender guidelines, so personal asset balances play a smaller role. Asset depletion relies on personal liquidity instead. The two can be compared on the same deal, and Lendmire’s complete DSCR loans guide explains that side. Where rent is thin compared to the payment on a high-priced property, asset depletion can be the better fit, provided the occupancy rules allow it.

Consumer mortgage licensing for this lane covers 16 states. Availability depends on where the property sits.

The Rule Behind It

Asset depletion rests on a federal ability-to-repay rule. CFPB’s Regulation Z section 1026.43 requires a lender to verify the income or assets it relies on using third-party records. In practice, that means statements for every account counted.

The same rule allows a lender to base repayment ability on income or assets other than the dwelling that secures the loan. That is why home equity cannot count. The rule does not set a divisor or a haircut, so those come from each lender’s own policy.

Asset Depletion vs. Bank Statement vs. DSCR

Three alternatives sit next to each other, and they fit different borrowers.

A self-employed owner with strong monthly deposits may do better on 12 months of business or personal bank statements, where qualifying income comes from deposit averages and lender-specific expense factors. A retiree with a large portfolio and little deposit activity may fit asset depletion. A landlord whose rent covers the payment may prefer a DSCR loan. Tax treatment varies, and avoiding a sale of appreciated holdings can matter, so consult a qualified professional.

Common Mistakes

• Counting net worth instead of eligible assets. Wealth held in real estate or a business usually does not count.
• Treating a retirement balance as full value. It is discounted.
• Spending the same funds twice. Money used for the down payment cannot also produce income.
• Assuming the lender sells or freezes your accounts. It does not. The calculation is a qualifying convention.
• Assuming no paperwork. Employment and tax-return documentation may be reduced, but the assets still need statements, source records, and seasoning for large deposits.
• Trusting a generic online calculator. It can overstate eligible assets and ignore the lender’s own discounts.

Documents and File Readiness

Prepare these before applying:

• Recent account statements for every account you plan to use.
• Explanations and source records for large deposits or transfers.
• Retirement account vesting and age information.
• Trust documents, if trust assets are part of the pool.
• Evidence that the funds are not borrowed.

Put forward only the accounts that strengthen the file. Extra accounts with messy activity can raise questions without adding much to the pool.

What to Ask a Lender

Before choosing a product, ask:

• What divisor does this program use?
• How are securities and retirement accounts discounted?
• Do down payment, closing costs, and reserves come out of the pool first?
• Is there an assets-only path, and does it test a DTI?
• Can I add pension or Social Security income?
• Is the property type and occupancy I need allowed?
• Can cash-out proceeds count toward reserves?

Next Step

If you hold substantial liquid assets and want to see how the numbers work, Lendmire can help you compare asset depletion and bank statement options based on your accounts, the property, credit profile, leverage, and goals. Lendmire is a mortgage broker that arranges financing through select lenders in its wholesale network, and qualification is subject to lender guidelines. This is not a commitment to lend. You can reach the team at 828-256-2183.

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

About Lendmire

Lendmire (NMLS# 2371349) is a mortgage broker licensed for consumer lending in 16 states. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.

References

1. Benzinga, Asset Depletion Mortgage

2. CFPB, Regulation Z § 1026.43

3. Cornell Legal Information Institute, 12 CFR 1026.43