Asset Depletion Mortgages In Indiana — The Quick Read: Asset depletion is a qualification method, not a separate loan type. A lender takes your verified liquid assets — cash, brokerage holdings, retirement accounts — and converts a slice of that balance into a monthly income figure used for underwriting. Indiana borrowers can access this through select wholesale non-QM and bank-portfolio programs, since Indiana sits inside a 16-state consumer-lending footprint that includes AL, CA, CO, FL, GA, IN, MI, MT, NM, NC, OH, PA, TN, TX, VA, and WA. The math varies by lender, by asset type, and by loan size — there is no single industry formula.
Sometimes your personal income paperwork doesn’t show what you really have. This happens a lot with founders, retirees living off a portfolio, or self-employed pros who write off a lot of expenses. In these cases, asset depletion gives underwriters something real to work with — not just a W-2.
Key Takeaways
- Asset depletion turns liquid assets into a monthly qualifying-income figure; it is a math method layered onto standard underwriting, not a loan product with its own name on a term sheet.
- Different programs divide eligible assets by different numbers of months — the divisor chosen changes the qualifying income dramatically from the identical asset base.
- Retirement accounts typically count at a reduced value, and funds already earmarked for a down payment or reserves can’t be double-counted toward the income calculation.
- Two distinct paths exist through select wholesale programs: an asset allowance (used to supplement income or stand alone above a size threshold) and an assets-only path (no debt-to-income calculation at all).
- For rental property purchases, DSCR loans — qualifying primarily on the property’s own rental income — are usually the more direct route; asset depletion is a personal-qualification tool that sits alongside it, not a replacement for it.
What Asset Depletion Actually Means
Asset depletion is a way of proving you can afford a payment using what you own instead of what you report as income. A lender adds up your eligible liquid holdings, applies any required reductions, and divides the result by a set number of months. That monthly figure gets treated like income for qualification.
This distinction matters because it changes how a lender reads your file. A retiree living comfortably off a seven-figure brokerage account but showing modest reportable income looks weak on a traditional application. Run the same file through an asset-based calculation, and the picture flips — the balance sheet, not the tax return, tells the real story.
There’s no single federal rulebook governing exactly how every lender must run this calculation. It’s a qualification method that non-QM investors and portfolio lenders build their own formulas around. The OCC Bulletin 2019-36 is the clearest federal guidance on the practice, directing banks that use this kind of asset-based underwriting to run it through the same safe-and-sound risk controls as any other repayment analysis. It doesn’t set a fixed formula — it sets expectations for how carefully a lender should apply whatever formula it chooses.
Key Terms Defined
Asset depletion (or asset dissipation): a qualification method that converts a borrower’s verified liquid assets into a monthly income figure for underwriting purposes, instead of relying only on wages or traditional personal-income documentation.
Divisor: the number of months a lender divides eligible assets by to produce the monthly qualifying-income figure. A shorter divisor produces a higher monthly income from the same asset pool; a longer one produces less.
Haircut: a reduction applied to certain asset types — most often retirement accounts — before they’re counted toward the qualifying calculation, reflecting withdrawal restrictions or early-withdrawal exposure.
Business-purpose loan: a loan made for an investment property rather than a home you live in. DSCR loans fall into this category and qualify primarily on the property’s own rental income, subject to lender guidelines.
How the Calculation Actually Runs, Step by Step
The math itself is simple. The variables underneath it are where files win or lose ground.
First, the lender inventories everything liquid: checking, savings, brokerage accounts, CDs, and retirement holdings. Statements need to be recent and consecutive — a transaction history printout won’t cut it, and large unexplained transfers usually draw a question.
Second, ineligible assets get stripped out. Business funds, gifts, trusts other than a revocable living trust, unvested stock, and cryptocurrency never count toward the calculation across the programs Lendmire places files with. Retirement accounts count, but at a reduced value — typically 70% of the balance, rising to 80% once the borrower is 59.5 or older, reflecting the reality that early withdrawals carry a cost.
Third, anything already earmarked elsewhere comes out of the pool. Funds set aside for the down payment, closing costs, or required post-closing reserves can’t be double-counted as qualifying income. A dollar only does one job.
Fourth, the divisor is applied. This is the step that decides the outcome. Through select wholesale programs, the two most common paths are an asset allowance divided by 36 months, 60 months, or 84 months, and an assets-only path that skips debt-to-income entirely. The shorter the divisor, the higher the monthly figure the same balance produces.
Fifth, the resulting number gets folded into the file exactly like any other income source, supporting the debt-to-income calculation alongside — or instead of — W-2, self-employment, or pension income.
Two Paths: Asset Allowance vs. Assets-Only
Not every asset-based file runs the same way. Through select wholesale programs Lendmire arranges files with, borrowers generally see two distinct structures.
The asset allowance path divides liquid assets by 36 months when it’s supplementing other income and the borrower’s overall debt-to-income sits at or below 60%, by 60 months when supplementing income above that 60% threshold, or by 84 months when it’s standing alone or the loan size exceeds $3,500,000. This path applies to primary residences and second homes, typically capped around 80% loan-to-value.
The assets-only path skips the debt-to-income calculation entirely. It requires the borrower to hold U.S. liquid assets equal to the full loan amount, plus closing costs, plus sixty months of any net loss carried on other residential property. This is the path for a borrower whose reported income tells you almost nothing — assets alone carry the file.
| Path | Divisor / Structure | Occupancy | Typical Max LTV |
|---|---|---|---|
| Asset allowance (DTI ≤ 60%) | 36 months | Primary, second home | ~80% |
| Asset allowance (DTI > 60% or standalone) | 60 or 84 months | Primary, second home | ~80% |
| Assets-only | No DTI calculated | Primary, second home | ~80% |
Both paths sit inside a broader size range that runs from $300,000 to $30,000,000 across two wholesale channels — a portfolio non-QM program that carries files to $6,000,000, and a bank-portfolio program that takes twelve-month-statement files up to $30,000,000 on its own leverage ladder.
Sizing and Leverage: What the Ladder Actually Looks Like
Leverage steps down as the loan gets bigger — that’s true across almost every high-net-worth program, and asset-based files are no exception. On a primary residence, purchase leverage through select wholesale programs typically runs 90% up to $1,000,000, 85% up to $1,500,000-$2,000,000, stepping down through the $2,000,000-$4,000,000 range, and settling into the case-by-case review zone above $4,000,000.
| Loan Size | Primary Residence | Second Home | Investment Property |
|---|---|---|---|
| $300K-$1M | up to 90% | up to 85% | up to 85% |
| $1.5M-$2M | up to 85% | up to 80% | up to 80% |
| $3M-$3.5M | up to 75% | up to 65% | up to 60% |
| $4M-$5M | 65%, case by case | 65%, case by case | 65%, case by case |
Every figure above $4,000,000 is reviewed case by case before submission — never a flat “up to” number at that size. Second homes and investment properties generally run roughly five points lower than a comparable primary residence at every size band, and credit-score floors climb with loan size, moving from a 660-680 floor on smaller files to 700 or higher above the super-jumbo line near $3,500,000 on a primary residence and $3,000,000 on a second home or investment property.
Reserves scale with loan size too — typically 3 months of housing payment for smaller loan amounts, 6 months for mid-size loan amounts, and 9 months above that, with 2 additional months required per other financed property up to a 12-month ceiling. First-time investors are typically held to a 12-month reserve requirement regardless of loan size.
In practice, Lendmire’s team sees a pattern in the strongest asset-depletion files. They pair a clean, consecutive statement trail with reserves that already sit above the program minimum. For example, a borrower who shows six months of reserves on a file that only requires three tends to move through underwriting with far fewer follow-up conditions. That’s compared to a borrower sitting right at the floor.
Where the General Rule Breaks
The asset-allowance and assets-only paths above are the baseline. A handful of situations bend that baseline, and knowing them ahead of time saves a rewritten file mid-process.
Above $4,000,000, everything is reviewed case by case. The published leverage figures on primary residences essentially stop functioning as fixed numbers past that size and become negotiating points reviewed loan by loan before submission.
Super-jumbo overlays kick in earlier on second homes and investment property. The stricter documentation and seasoning standards — a 700 credit floor, a clean 24-month housing-payment history, 48-month seasoning on any credit event, no non-occupant co-borrowers, no rural property, and a ten-acre maximum — apply above $3,500,000 on a primary residence but above just $3,000,000 on a second home or investment property.
Cash-out proceeds cannot satisfy reserve requirements. If a file leans on cash-out to build post-closing liquidity, that money doesn’t count toward the reserve calculation on a super-jumbo file. Final terms depend on lender guidelines, property type, leverage, and the borrower’s complete credit picture.
Cash-out itself is capped differently by size. Through the portfolio non-QM channel, cash-out is unrestricted at or below 60% loan-to-value, but capped at $1,500,000 in proceeds above that threshold. The bank-portfolio program carries no published cap, but its own leverage ladder — 65% to $5,000,000, stepping to 60% and then 55% at the top — limits how much equity can be pulled regardless.
Business-purpose loans run a different playbook entirely. Asset depletion, as structured above, applies to primary residences and second homes — a personal qualification overlay. Rental property purchases usually run through Lendmire’s complete DSCR loans guide, where the property’s own rental income covers the payment rather than the borrower’s balance sheet.
Asset Depletion for Rental Property Investors: A Supporting Role, Not the Main Tool
Say an investor is buying a rental property outright. Here, asset depletion is rarely the main qualification tool. DSCR underwriting usually does that job more directly — it qualifies primarily on property-level rental income covering the payment, subject to lender guidelines. Asset-based math earns its place elsewhere: on the personal side of the ledger. Think of a second-home purchase, a large reserve requirement, or a file where the borrower’s brokerage account needs to show real capacity without forcing a portfolio liquidation.
DSCR loans are business-purpose loans, so lenders review them differently from a standard owner-occupied mortgage. Because of this, an investor with substantial liquid wealth but modest reported income can often run two tracks at once. One track is DSCR on the rental purchase itself. The other is an asset-based overlay to support reserves or a companion second-home file. Investors who want to dig deeper into how this plays out can look at Lendmire’s coverage of asset depletion mortgages in California and asset depletion mortgages in Whitefish. The same mechanics apply there, even though the property types are very different.
The ability-to-repay standard sits behind all of this. It’s the rule that says a lender must verify a reasonable, documented basis for repayment before making a covered loan. This rule treats income and assets as interchangeable proof. That’s exactly why this qualification method exists — it’s not just a workaround.
Who This Actually Fits
This path tends to fit three kinds of borrowers well. First, a retiree with a substantial brokerage or retirement balance and little reportable income. Second, a self-employed professional whose deductions legitimately shrink taxable income relative to their real cash position. Third, a high-net-worth investor who doesn’t want to liquidate a growing portfolio just to satisfy a lender’s paperwork preference. In each case, the goal is the same: keep the money invested and working, and let the balance sheet do the qualifying instead.
Tax treatment can depend on how 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.
Are you weighing asset-based qualification against a rental-property purchase that might qualify on the property’s own income instead? Lendmire can help. The team can compare the options against your actual asset picture, credit profile, and leverage target. Reach them at 828-256-2183 or request a quote directly.
For deeper background on the mechanics discussed here, see Federal Register — ATR/QM Final Rule (2013).
Frequently Asked Questions
Do I have to spend down my accounts to use asset depletion?
No. The calculation is a qualifying formula, not a withdrawal requirement. Your assets stay invested and untouched — the lender simply uses the balance to calculate a hypothetical monthly income figure for underwriting.
Is asset depletion the same thing as a bank-statement loan?
No. A bank-statement loan looks at deposit activity flowing through your accounts over 12 or 24 months. Asset depletion looks at the balance sitting in the account right now and converts a portion of it into income using a divisor.
Can I combine asset depletion with other income?
Often, yes. The asset allowance path is frequently used to supplement W-2, self-employment, or pension income rather than replace it entirely, with the divisor chosen based on your overall debt-to-income position.
Does Indiana have any special rules for asset depletion loans?
No state-specific rules govern this qualification method in Indiana. Indiana sits inside a 16-state consumer-lending footprint where these wholesale programs are available, and the underwriting mechanics are identical to what’s used elsewhere in that footprint.
What happens if my loan is above $4,000,000?
Every file above that size is reviewed case by case before submission rather than sized against a fixed leverage table. Expect closer scrutiny of documentation, reserves, and the specific asset mix behind the qualifying calculation.
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 non-QM mortgage broker serving real estate investors in 40 markets, including Washington, D.C., through DSCR investor loan programs. Qualification is generally reviewed around the subject property’s rental income, not the borrower’s W-2 history — a practical fit for LLC-titled portfolios and self-employed investors. All scenarios remain subject to lender review and program guidelines. Two consecutive Scotsman Guide Top Mortgage Workplace recognitions (2025, 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
2. Federal Register — ATR/QM Final Rule (2013)
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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Legal disclosures. Lendmire (NMLS# 2371349) is a state-licensed mortgage brokerage that arranges financing through wholesale lender relationships. Lendmire is not a direct lender, depository institution, or registered financial advisor. The discussion above is general informational content about real estate financing — it is not financial, legal, or tax advice, and readers should consult licensed professionals for guidance on their individual circumstances. Loan inquiries are subject to lender underwriting; this article does not represent a commitment to lend. Loan terms, rates, and qualification standards vary by borrower, property, and state, and are subject to change at any time. Equal Housing Opportunity. NMLS Consumer Access: nmlsconsumeraccess.org.
