Asset Depletion Mortgage Haircut Every Account The Same — The Quick Read: No. Cash sitting in checking or savings usually counts at or near full value, while retirement accounts and securities get discounted before a lender will use them. The discount also shifts with your age, the account type, and which lender is reading the file. Two people with identical net worth can walk away with very different qualifying numbers, purely because of where their money sits.
That’s the whole answer in miniature. The rest of this piece walks through why the discount varies, which accounts get zeroed out entirely, and where the math tends to trip people up.
Key Terms Defined
Asset depletion is a way to qualify for a mortgage using your liquid assets instead of a paycheck, tax return, or W-2. A lender turns your account balances into a notional monthly income figure and runs it through a normal debt calculation.
Haircut is the percentage a lender cuts from an account balance before counting it. A 30% haircut on a stock account means only 70 cents of every dollar shows up in the math.
Divisor is the number of months a lender spreads your eligible assets across to produce that monthly income figure. A shorter divisor produces a bigger monthly number from the same pile of money; a longer one produces a smaller one.
DTI (debt-to-income ratio) measures your monthly debts against your monthly income — in this case, the notional income the depletion math produces, not a paycheck.
Reserves are the months of housing payments a lender wants sitting untouched in the bank after closing, on top of the money used for the down payment.
Seasoning is how long money has to sit in an account before a lender will treat it as fully yours. Funds deposited too close to application can get flagged and set aside until they season.
Why Cash, Stocks, and Retirement Accounts Get Treated Differently
The short version: liquidity and volatility drive the discount. Cash doesn’t lose value overnight and it’s already spendable, so lenders generally count it close to full value. A brokerage account full of stocks can drop 20% in a bad month, so a lender wants a buffer before trusting that number. Retirement accounts carry an extra wrinkle — early withdrawal penalties and taxes eat into what you’d actually net if you pulled the money out, so the discount runs deeper there too.
Across the wholesale programs Lendmire places files with, retirement accounts typically count at 70% of their balance, and that figure moves up to roughly 80% once the borrower clears age 59½ — the point where the IRS penalty on early withdrawals goes away. That single birthday can change a file’s eligible asset pool by a meaningful margin without a single dollar moving in or out of the account.
Cash-type holdings — checking, savings, money market, CDs — don’t carry that same age-based logic at all, because there’s no penalty standing between the borrower and the money. That’s the core reason the haircut schedule isn’t one flat number: each asset class carries its own access risk, and the discount is built to match it.
The Age Line That Changes Everything
Fifty-nine and a half is the hinge point most programs build around, because it’s the age the IRS stops charging an early-withdrawal penalty on retirement account distributions. Below that line, a lender assumes some of the account’s value would evaporate into penalties and taxes if the borrower actually tapped it, so the haircut runs heavier. Above it, the account is treated as closer to genuinely liquid, and the haircut eases.
This isn’t a minor technicality for a borrower sitting close to that birthday. Someone applying at 58 with a 401(k)-heavy balance sheet may find their eligible asset pool looks noticeably thinner than it will eighteen months later — same balance, same account, different age. It’s worth timing an application around that line when the math is close, rather than assuming the calendar doesn’t matter.
What Never Counts, No Matter the Haircut
Some assets aren’t just discounted — they’re excluded completely. No haircut schedule brings them back into the calculation. On the programs Lendmire’s team places files through, that list typically includes business funds sitting in a company account, gift funds, trusts other than a revocable living trust, unvested stock, and cryptocurrency.
The business-funds exclusion catches a lot of self-employed borrowers off guard. Owning 100% of a company doesn’t automatically make its bank balance yours for underwriting purposes — the money has to actually sit in a personal account, seasoned, before it can be counted. The same logic applies to a business sale: proceeds sitting in the seller’s business account generally don’t count until they’re moved, seasoned, and documented as personal funds.
Cryptocurrency and unvested equity compensation face a similar wall. A founder holding a large unvested RSU grant can be sitting on paper wealth that simply doesn’t exist for asset depletion purposes until it vests. This is a structural gap, not a stricter haircut — no percentage, however aggressive, brings an excluded asset back into the pool.
The Divisor Matters as Much as the Haircut
A generous haircut paired with a long divisor can still produce a lower coverage figure than a stricter haircut paired with a short one. The divisor spreads the eligible pool across a set number of months to produce the monthly figure a lender uses in the debt calculation — and that timeframe swings the outcome as much as the discount percentage does.
On the asset-allowance path Lendmire’s wholesale network commonly places, that divisor typically runs 36 months when the asset income supplements other qualifying income and the borrower’s overall DTI sits at or below 60%, 60 months when it’s supplemental but DTI runs higher, and 84 months when the asset math has to carry the file on its own or the loan amount runs above $3,500,000. A borrower with the exact same eligible pool sees a meaningfully different qualifying figure depending on which of those three divisors applies to their file — which is exactly why comparing programs on haircut alone misses half the picture.
Reserves, Credit, and the Rest of the File
Asset depletion doesn’t sit in a vacuum — credit, reserves, and overall debt load still shape what a file can support. Across the wholesale programs Lendmire arranges, credit typically needs to clear a 660 floor, though files above roughly $3,500,000 on a primary residence (or $3,000,000 on a second home) generally need a 700 floor under stricter super-jumbo overlays. DTI up to 50% is common on most files.
Reserve requirements typically scale with loan size: three months of housing payments on smaller loans, six months once the balance crosses roughly $500,000, and nine months above that — plus additional months per other financed property the borrower already owns, up to a twelve-month ceiling. First-time real estate investors often see a full twelve months required regardless of loan size. None of these are universal figures; they’re typical ranges from select lenders in the network, and every file still goes through full underwriting.
An anti-double-counting rule runs through every version of this math. Assets used to generate the notional depletion income generally can’t also be credited for the interest or dividends they produce. Counting the same dollar twice inflates the file and can create a surprise later in underwriting.
Where Asset Depletion Hits a Wall — And Why Rental Investors Pivot to DSCR
Here’s the limit that matters most for a real estate investor: asset depletion and the related asset-allowance path are typically built for primary residences and second homes. They’re usually capped around 80% loan-to-value, and they generally don’t apply to investment property at all. So if your goal is financing a rental purchase or refinance on the investment property itself, this isn’t the right tool.
That’s usually when a rental buyer’s file moves toward a DSCR loan instead. This loan mainly qualifies based on the property’s own rental income covering the payment, subject to lender guidelines. It doesn’t rely on the borrower’s personal assets or normal personal-income paperwork. DSCR loans are built for non-owner-occupied investment properties. They’re business-purpose investor loans, so lenders review them differently than a standard owner-occupied mortgage. They also fall outside the consumer disclosure timelines that apply to a typical home loan.
So the practical split looks like this: an investor buying or refinancing their own residence, with wealth concentrated in cash, brokerage, and retirement accounts, is exactly who asset depletion is built for. An investor buying the tenth rental house in a portfolio is usually better served by a loan that reads the lease, not the balance sheet.
When reviewing deposit patterns on bank-statement and asset files, the same handful of issues tend to show up again and again. There’s often a large deposit that isn’t sourced yet. Sometimes there’s a business-account transfer that hasn’t seasoned. Other times, an asset pool gets presented before closing costs and reserves are subtracted. Files that have their sourcing paperwork ready before submission tend to move through underwriting with far fewer conditions. Files where that documentation shows up later tend to run into more trouble.
Common Mistakes That Shrink the Eligible Pool
A few recurring errors cost borrowers more eligible asset value than any haircut schedule ever will:
- Counting assets before subtracting closing costs and reserves. The money earmarked for the down payment, closing costs, and required reserves comes out of the pool before the divisor runs — skip that step and the projected number won’t survive underwriting.
- Treating all retirement accounts the same. Some account-by-account breakdowns discount a 401(k) differently than an IRA, even under a single lender’s guidelines.
- Assuming a large recent deposit counts immediately. Unseasoned deposits, and any deposit that looks unusually large relative to the account’s normal activity, typically need to be sourced before a lender will count them.
- Leaving business income unseasoned in a business account. Moving money into a personal account the week before applying rarely satisfies a lender’s seasoning window.
- Double-counting income and assets from the same source. An account already generating the depletion income generally can’t also be credited for the interest or dividends it produces.
The ability-to-repay framework governs mortgage underwriting broadly. It requires lenders to consider and document a borrower’s income, assets, credit, and expenses before extending a loan. The CFPB’s ability-to-repay guidance lists assets as one of eight factors a creditor must weigh. This framework comes from the underlying 2013 rule, but it doesn’t set one single haircut formula. Legal analysis of the rule notes that the general qualified-mortgage standard leaves the underwriting method up to individual lenders. That’s exactly why the schedules vary so much from one program to the next.
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
Does my age really change how much of my 401(k) counts?
Yes. On most programs, retirement accounts count at a lower percentage before age 59½ and step up afterward, because that’s the age the IRS penalty on early withdrawals disappears. The account balance doesn’t change — only how much of it a lender will use.
Can I use my business bank account balance to qualify?
Generally, no — not directly. Funds sitting in a business account typically need to move into a personal account and season there before a lender counts them, even if you own 100% of the business. Business ownership alone doesn’t establish personal access to the funds.
What happens if I deposit a large sum right before applying?
It likely gets flagged. Deposits that are unusually large relative to an account’s normal activity typically require documentation showing where the money came from, and freshly deposited funds may need time to season before they’re counted at all.
Is cryptocurrency ever eligible for asset depletion?
On the programs Lendmire’s network typically works with, cryptocurrency doesn’t count toward the depletion calculation. It generally has to be liquidated, converted, and seasoned in a bank account first — and even then, treatment varies by lender.
Can I use asset depletion to buy a rental property?
Usually not — asset depletion and the related asset-allowance structures are typically built for primary residences and second homes, not investment property. Rental purchases and refinances more often move toward a DSCR loan, which qualifies primarily on the property’s own rental income rather than the buyer’s personal balance sheet, subject to lender guidelines.
Are you trying to decide whether your balance sheet supports an asset-based purchase, or whether a rental deal makes more sense underwritten on the property’s own income? Lendmire can help you compare options. This includes looking at your asset mix, credit profile, leverage, and what you’re actually trying to buy.
For current guidelines and terms, see Lendmire’s super jumbo bank statement loan programs page.
About Lendmire
A DSCR-focused mortgage broker, Lendmire (NMLS# 2371349) places investor financing across 40 markets — 39 states plus Washington, D.C. — with DSCR eligibility generally reviewed by the lender on property cash flow instead of tax returns, subject to lender guidelines. Scotsman Guide named Lendmire a Top Mortgage Workplace in 2025 and 2026.
Lendmire’s Top Mortgage Workplace recognition is documented by Scotsman Guide 2025 Top Mortgage Workplace and Scotsman Guide 2026 Top Mortgage Workplace.
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References
1. CFPB — Ask CFPB: What is the ability-to-repay rule
2. CFPB/NCSHA — Ability-to-Repay/Qualified Mortgage Final Rule
3. Cullen and Dykman LLP — CFPB Qualified Mortgage Rule Analysis
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
- Mortgage Loan Originator · NMLS# 1129696 · Verify on NMLS Consumer Access
- North Carolina Real Estate Broker · License# 343312 · Verify on NCREC
- North Carolina Insurance Producer · License# 19053198 · Property, Casualty, Life, Health · Verify on NAIC SBS
- Lendmire LLC · Firm NMLS# 2371349 · Verify firm licensure
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.
