Asset Depletion Mortgages In Michigan — The Quick Read: An asset depletion mortgage lets a borrower qualify using liquid assets instead of a paycheck. A lender divides eligible assets by a set number of months to produce a monthly qualifying figure. It’s a non-QM underwriting method, not a government program, so the math varies by lender. For Michigan rental buyers, the state’s own licensing rules treat investment property differently than a primary home, which matters more than most borrowers realize.
Michigan doesn’t change the underwriting math. What changes is which regulatory lane a given loan sits in — consumer or business purpose — and that has real consequences for documentation and disclosure.
Key takeaways:
- Asset depletion converts liquid assets into an imputed monthly income figure; it doesn’t hand you the money.
- The divisor a lender uses (36, 60, or 84 months in the wholesale programs Lendmire places files with) changes the coverage figure dramatically.
- Not every asset counts the same — retirement funds, business accounts, and unvested stock all get treated differently.
- Michigan’s mortgage-licensing rules carve investment property out of the state’s consumer “mortgage loan” definition, which lines up with the federal business-purpose exemption most rental buyers already fall under.
- Asset depletion pairs well with DSCR financing on rental purchases — one proves liquidity, the other proves the property’s income covers the payment.
Key Terms Defined
Asset depletion (or asset dissipation): an underwriting method that turns liquid savings and investments into a monthly income figure, instead of relying on traditional personal-income documentation or pay stubs.
Divisor: the number of months a lender divides your eligible assets by. A shorter divisor produces a bigger monthly qualifying figure; a longer one produces a smaller one.
Asset allowance: a structure where the depleted asset figure supplements a standard debt-to-income calculation rather than replacing it entirely.
Assets-only qualification: a structure that skips the debt-to-income calculation altogether and instead confirms the borrower holds enough liquid assets to cover the loan amount, closing costs, and a set number of months of carrying costs.
Non-QM (non-qualified mortgage): a loan that doesn’t fit the narrow federal Qualified Mortgage box, which gives lenders room to build alternative income and asset calculations like this one.
Business-purpose loan: a loan made to acquire or improve a rental or investment property, rather than a home you live in. Business-purpose loans sit outside most of the consumer mortgage disclosure rules that apply to owner-occupied lending.
How Underwriting Actually Treats Your Assets
Every asset depletion file runs through the same basic sequence, whether the lender is conservative or aggressive about it.
Step one: identify what counts. Checking, savings, CDs, money-market funds, and brokerage accounts are the core eligible pool. Retirement accounts usually count too, but not at full value — across the wholesale programs Lendmire’s network places, vested retirement balances typically count at 70%, rising to 80% once the borrower is past 59½. That haircut exists because early withdrawal carries a penalty, and underwriters price that friction into the number.
Step two: strip out what you’re not allowed to count. Business funds generally don’t qualify on their own, gifted or trust funds outside a revocable living trust don’t count, and unvested stock or cryptocurrency doesn’t count at all in the programs Lendmire’s network reviews. That surprises a lot of borrowers who assume “assets are assets.” They aren’t, underwriting-wise.
Step three: subtract what the deal already needs. Before any divisor gets applied, the underwriter pulls out the funds earmarked for the down payment, closing costs, and required reserves. Only what’s left after that gets divided.
Step four: apply the divisor. This is where programs diverge the most. On an asset allowance structure, Lendmire’s network commonly applies a 36-month divisor when the resulting debt-to-income comes in at or below 60%, and a 60-month divisor when it runs above that threshold. Loans above $3,500,000, or any file treated as standalone rather than supplemental, typically use an 84-month divisor. Longer divisors produce a smaller monthly figure — harder to qualify with, but sometimes still enough when the asset base is deep.
Step five: decide between allowance and assets-only. If the borrower doesn’t need the depleted figure inside a debt-to-income ratio at all, an assets-only path may apply — verified U.S. liquid assets equal to the loan amount, plus closing costs, plus sixty months of any net loss on other owned residential property, with no DTI calculation involved. This route is common with high-net-worth borrowers who’d rather prove liquidity outright than manufacture an income number.
Step six: verify it’s really yours, and that it’s been there. Underwriters want statement history showing the funds are stable, not a temporary deposit dressed up to look like savings. This applies just as much to a business-purpose rental purchase as to a primary residence, even when the loan itself sits outside consumer mortgage disclosure rules.
Say an appraiser looks at a rental purchase and also notes the market rent. That info usually comes from Fannie Mae’s Form 1007, called the Single-Family Comparable Rent Schedule. This form started in agency lending. But lenders now use it as a shorthand in non-QM and DSCR files too. It’s simply the standard way to show what a unit rents for.
The Structures and Variations That Actually Exist
Asset depletion isn’t one product — it’s a family of related structures, and the differences matter more than the label.
The asset allowance structure is the most common version in Lendmire’s wholesale network. It caps at 80% loan-to-value on primary and second homes, and it’s built to supplement income rather than replace it entirely — useful for a borrower with some income but not enough to clear standard DTI on their own.
The assets-only structure sits at the far end. No income is used at all; the file stands purely on liquid reserves relative to the loan size. It’s a heavier liquidity bar, but it removes the income conversation from the file entirely.
There’s also a size-driven variation worth knowing about. On the largest files — the portfolio non-QM bank-statement program that carries loans to $6,000,000, and the bank portfolio program that carries twelve-month-statement files to $30,000,000 on its own leverage ladder — leverage steps down as the loan gets bigger: 65% to $5,000,000, 60% to $10,000,000, and 55% to $30,000,000, with interest-only capped at 60% or the band’s own ceiling, whichever is lower. Every file above $4,000,000 in this range goes through case-by-case review before it’s even submitted; that’s not boilerplate caution, it’s how the program actually runs.
Leverage on a primary residence steps down with size too, and it’s not a flat number. Most files in the 90% territory sit at loan amounts up to $1,000,000; that ceiling drops to 85% by $2,000,000, 80% by $3,000,000, and 75% at the top credit tier by $4,000,000, before moving into case-by-case territory up through $6,000,000 and then onto the bank program’s own ladder. Second homes and investment properties generally run about five points lower than the primary-residence numbers at every size band — a rental purchase leveraged the same as an owner-occupied home is the exception, not the rule.
Where the General Rule Breaks — Named Edge Cases
Retirement funds before 59½. The haircut on retirement balances tightens for younger borrowers, reflecting the early-withdrawal penalty risk lenders won’t ignore.
Business assets versus personal assets. Money sitting in a business account doesn’t move as cleanly into an asset depletion calculation as money in a personal account. Ownership and access are murkier, and pulling funds out of an operating business raises questions a personal account never has to answer.
Unseasoned deposits. A large sum that just landed in an account — an inheritance, a settlement, a business sale — gets extra scrutiny everywhere in non-QM lending. Underwriters want to see the money sit for a defined period before they’ll trust it as part of the asset base.
The divisor swing. Scotsman Guide’s coverage of the category notes that asset depletion converts asset value and its income-generating potential into a qualifying figure — but how much that figure is worth depends entirely on which divisor the program applies. A shorter divisor and a longer one, run against the same asset pile, can produce wildly different qualifying outcomes. That’s the single biggest lever in the whole mechanic, and it’s set by the lender, not by any regulator.
Business-purpose versus consumer-purpose — a different rulebook entirely. A loan to buy, improve, or hold a non-owner-occupied rental property is generally treated as a business-purpose loan, which sits outside the federal consumer mortgage disclosure framework that governs owner-occupied lending. That doesn’t mean business-purpose loans are unregulated — other consumer-protection rules can still apply — but it does mean the paperwork and disclosure path looks different than a loan on the house you live in. As legal commentary on the point puts it, business purpose doesn’t mean compliance-exempt, even where the specific ability-to-repay rule doesn’t apply.
Michigan’s own wrinkle. Michigan’s state mortgage-licensing framework draws the same basic line at the state level: commercial and investment property is carved out of the state’s definition of a consumer “mortgage loan.” Practically, that means a Michigan investor buying a rental with asset depletion or DSCR financing is typically operating in the business-purpose lane at both the state and federal level — not the more heavily disclosure-regulated lane a homebuyer sits in. Michigan is also one of the 16 states where Lendmire’s own consumer mortgage lending is licensed, alongside states like Florida, Texas, and California, though that licensing footprint governs owner-occupied lending — rental-property files run through a separate business-purpose channel.
What the Investor Decision Actually Looks Like
Picture an investor with a seven-figure brokerage account and a rental property they want to refinance for cash flow. Their traditional income documents show almost no reportable income, thanks to depreciation and cost segregation. Conventional underwriting sees a problem in that file. Asset-based underwriting sees a solution instead. The liquidity is real — it just doesn’t show up on a 1040.
This is where asset depletion and DSCR financing usually work together instead of competing. A DSCR loan bases lender review on the property’s own rental income — it doesn’t look at the borrower’s personal income at all. Lendmire’s complete DSCR loans guide explains how that coverage ratio gets calculated in more depth. Asset depletion solves a different problem: it proves the borrower has enough reserves and net worth to cover the down payment and carrying costs, without needing traditional personal-income documents to do it.
Let’s run the numbers on a borrower weighing a full cash purchase against financing with asset depletion support. Paying cash means cashing in whatever gains sit in that portfolio, and pulling that money out of compounding. Financing through an asset-based qualification path can let the borrower keep the portfolio invested, while still using its value to secure the loan. This is a real trade-off, so it’s worth discussing with a tax professional before deciding either way.
A pattern shows up again and again in files that come through Lendmire’s wholesale network. These borrowers have strong balance sheets and thin paper income. They also often carry multiple financed properties, which pushes their conventional debt-to-income ratio past what a standard lender will accept. This isn’t a credit problem. It’s a documentation mismatch. Asset-based and DSCR underwriting were built to solve exactly this. When income is used, these files typically need 12 or 24 consecutive months of bank statements. When it isn’t, lenders look at statement history for the asset base itself. Reserves generally run 3 months on smaller balances, 6 months in the mid-range, and 9 months on larger loans. Add two more months for every other financed property the borrower carries. Credit floors sit around 660 on the core portfolio program. That floor rises to 700 once a loan reaches super-jumbo territory.
Cash-out on a rental refinance has its own leverage limit. It’s typically capped around 75% for a standard rental, and 70% when the property is a short-term rental. Proceeds above 60% LTV are subject to a cap on the portfolio program. If you’re weighing this against a purchase, it may help to see how Lendmire explains the cash-out mechanics for asset-depletion borrowers in another market. The same basic logic applies there.
DSCR loans are designed for non-owner-occupied investment properties. Because they’re business-purpose investor loans, they get reviewed differently than a standard owner-occupied mortgage — which is part of why the documentation path looks so different from a W-2 borrower’s file.
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 asset depletion mean the lender takes my money? No. The lender never touches your assets. It runs a formula that converts a portion of your liquid balances into an imputed monthly income figure for qualification purposes only — the money stays yours, invested or in cash, exactly where it was.
Is Michigan’s asset depletion program different from other states? Michigan’s licensing rules exclude commercial and investment property from its consumer mortgage definition, which lines up with the federal business-purpose exemption most rental-property borrowers already fall under.
Can I combine asset depletion with a DSCR loan on the same rental purchase? Often, yes, subject to lender guidelines. DSCR underwriting looks at whether the property’s rental income covers the payment; asset depletion or an assets-only path can separately support the down payment, closing costs, and reserves without pay stubs or traditional income documentation.
What assets don’t count toward asset depletion? Business funds, gifts and trust assets outside a revocable living trust, unvested stock, and cryptocurrency typically don’t count in the wholesale programs Lendmire’s network reviews. Retirement accounts count, but at a reduced percentage tied to the borrower’s age.
Does a shorter or longer divisor help me more? A shorter divisor produces a larger monthly qualifying figure, which generally helps you qualify for more. A longer divisor is more conservative and produces a smaller figure — some programs use it specifically for larger or standalone asset-based files, where a bigger asset base can still clear the bar even with a longer divisor.
If you’re buying or refinancing a rental property and want to see how the numbers work, Lendmire can help you compare asset-based and DSCR loan options based on the property’s income, your liquidity, credit profile, and leverage goals. Reach Lendmire at 828-256-2183 or request a quote to start the conversation.
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 investor financing, arranging DSCR loans in 39 states plus Washington, D.C. — 40 markets total. Qualification is based on the property’s income rather than personal income documentation, subject to lender guidelines, making it a fit for LLC-held rentals and scaling portfolios. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
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References
1. Fannie Mae – Form 1007, Single-Family Comparable Rent Schedule
2. Scotsman Guide – “These Loans Should Take Center Stage”
3. Lexology – “Beware of ‘Business Purpose'”
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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Important disclosures. Lendmire (NMLS# 2371349) is a licensed mortgage brokerage. Lendmire is not a direct lender, depository institution, or financial advisor. All loan inquiries are subject to lender underwriting; this article does not constitute a commitment to lend. Rates, terms, and program guidelines are subject to change without notice and vary by borrower profile, property type, and state. Information in this article is general in nature and is not financial, legal, or tax advice. Equal Housing Opportunity. NMLS Consumer Access: nmlsconsumeraccess.org.
