Asset Depletion Mortgages In Nantucket — The Quick Read: Asset depletion underwriting turns liquid assets — brokerage accounts, retirement funds, savings — into a monthly income figure a lender can use to qualify a borrower, instead of traditional personal-income documentation or pay stubs. It works by dividing eligible assets, after haircuts and reserves, by a set number of months. The math changes more than any other variable in non-QM lending: the divisor a lender picks can double or halve the income it produces from the same account balance.
This matters most for buyers whose net worth is real but whose traditional personal-income documentation doesn’t show it — retirees living off distributions, founders who just sold a company, investors whose income comes from capital gains instead of a paycheck. None of them look strong on a standard 1040. All of them can look strong on a balance sheet.
What an Asset Depletion Mortgage Actually Is
An asset depletion mortgage — also called asset dissipation or asset qualifier underwriting — lets a lender treat verified liquid assets as a substitute income source. This means the borrower doesn’t need W-2s or two years of traditional personal-income documentation. It’s not a workaround. It’s a recognized underwriting method. The idea is simple: a borrower with $4 million in a brokerage account can likely afford a mortgage payment, even if their reported taxable income is modest. Assets aren’t a loophole. The federal framework itself names them as a permissible substitute for income.
Every wholesale lender that offers this sets its own divisor, its own haircuts, and its own list of eligible accounts. That’s the single biggest thing borrowers get wrong going in — they assume there’s one formula. There isn’t.
Key Terms Defined
Asset depletion (asset dissipation): underwriting that converts a borrower’s liquid assets into a monthly income number instead of using traditional income documentation or pay stubs.
Divisor: the number of months a lender divides eligible assets by to produce monthly qualifying income. A shorter divisor produces a bigger income number from the same asset pool.
Haircut: a discount applied to a volatile or restricted asset class — retirement accounts and securities — before it’s counted toward qualifying assets.
Asset allowance: a supplemental income method that adds imputed asset-based income on top of other documented income, rather than replacing it entirely.
Assets-only qualification: a path where a borrower’s liquid U.S. assets must equal the full loan amount plus closing costs, removing debt-to-income from the equation altogether.
How the Math Actually Works, Step by Step
The mechanics run in a fixed order: identify eligible assets, discount the volatile ones, subtract what the transaction itself will consume, then divide by a time period to get a monthly figure. Each step has its own judgment calls, and that’s where files get stronger or weaker.
Step one — eligible assets. Checking, savings, money-market, brokerage, and retirement accounts generally qualify. Business equity, closely-held stock, unvested equity, and real estate equity typically don’t, because a lender can’t verify how easily — or cheaply — that value converts to cash. Across the wholesale network Lendmire works with, retirement funds count at 70% of value, rising to 80% once the borrower is past 59½ and can access the account without penalty. Business funds, gifts, trusts other than a revocable living trust, unvested stock, and cryptocurrency never count, full stop.
Step two — haircuts. Retirement and securities holdings get discounted before they enter the calculation, since their value can swing with the market. The OCC’s 2019 guidance on asset dissipation underwriting tells banks to apply discounts that account for liquidity, price volatility, and any penalty for accessing funds early — and to assume no rate of return on the assets while they’re being drawn down for qualification. In plain terms: the lender isn’t supposed to assume the portfolio keeps growing while it’s being spent down on paper.
Step three — net out the transaction. Down payment, closing costs, and required post-closing reserves get subtracted from the eligible pool before any depletion math runs. A borrower with $3 million in eligible assets who needs $800,000 for the purchase and reserves is only depleting the remaining $2.2 million.
Step four — divide by the term. This is where programs diverge the most. Across the wholesale lenders Lendmire places files with, the asset allowance method divides by 36 months when it’s supplementing other documented income and the borrower’s overall debt-to-income sits at or below 60%, by 60 months when DTI runs above that, and by 84 months when the asset income is standing alone — or on any loan above $3,500,000, regardless of DTI. That’s a wide spread on purpose: a lender lets the divisor stretch longer when the file needs more conservative math, and tighten when the borrower’s overall profile is already strong.
Step five — underwrite the income like any other. Once the imputed monthly figure exists, it gets layered against credit, reserves, debt-to-income, and property type the same way traditional employment income would. Assets alone don’t clear a file. A borrower still needs the credit score, the reserves, and the overall strength to support the loan being requested.
The Structures and Variations That Actually Exist
Not every asset-based file works the same way. Some blend assets with other income. Others stand entirely on assets alone. These two paths produce very different qualifying math. Knowing which lane fits a borrower changes what leverage and loan size are realistically available. The Ability-to-Repay rule under Regulation Z provides the regulatory backbone here. This rule requires lenders to make a reasonable, good-faith determination that a borrower can repay a loan. The rule lists eight factors lenders must weigh. Current or reasonably expected income or assets is explicitly one of them, according to the Consumer Financial Protection Bureau’s summary of the Ability-to-Repay/Qualified Mortgage rule.
Asset allowance is the supplemental route. It adds imputed income from assets on top of whatever documented income the borrower already has — Social Security, a pension, part-time consulting, rental income. This is the common fit for a retiree who has some income but not enough to qualify for the loan size they want on its own. It’s available on primary and second homes only, capped at 80% loan-to-value on most files in Lendmire’s network.
Assets-only qualification removes debt-to-income from the picture entirely. To use it, the borrower’s U.S.-based liquid assets need to equal the full loan amount, plus closing costs, plus 60 months of any documented net loss on other residential real estate they own. This is a heavier liquidity bar, and it’s built for the borrower whose net worth is enormous relative to the loan size — someone financing a $1.5 million purchase out of a $9 million portfolio, for example, where the lender wants proof of overwhelming capacity rather than a ratio.
This creates a meaningful gap for investors: an agency-adjacent asset depletion loan simply isn’t built for buying a rental property. Anyone buying investment real estate through asset-based qualification is working in the non-QM space by default, not the agency space. Keep in mind that every figure here varies by lender and program. Guidelines, property type, leverage, and credit profile all play a role.
Loan sizing across the wholesale network runs from $300,000 to $30 million through two overlapping programs. A portfolio non-QM structure carries files to $6 million; a bank-statement-based portfolio program carries twelve-month files as high as $30 million on its own leverage ladder — 65% to $5 million, 60% to $10 million, and 55% up to $30 million, with interest-only capped at 60% or the band’s ceiling, whichever is lower. On a primary residence, leverage steps down as size climbs: as high as 90% below $1 million, 85% to $2 million, 80% to $3 million, and 75% at the top credit tier to $4 million. Above $4 million, every file goes to case-by-case review before it’s even submitted — never treat any figure above that size as a flat “up to.”
Where the General Rule Breaks
The biggest edge case isn’t a program quirk — it’s the agency-versus-non-QM gap described above, and it catches more borrowers off guard than anything else in this space. It usually just means they were quoted the wrong lane.
A second edge case involves how rental income and asset-based income get kept separate on the same file. When an investment property’s own rent needs to be documented — separate from the borrower’s asset-based qualifying income — appraisers use the Single-Family Comparable Rent Schedule, Fannie Mae’s Form 1007, to opine on market rent. That form values the real property only; it can’t fold business income or projected short-term rental revenue into its number. The two income streams — the borrower’s personal asset-based qualifying income and the property’s own rental income — get underwritten on entirely separate tracks, even within a single file.
A third edge case: regulators never fixed a divisor. Neither the CFPB’s rule nor the OCC’s bulletin specifies a number of months, a haircut percentage, or an asset floor. That silence is intentional — it leaves room for lenders to justify their own methodology based on file strength — but it’s also exactly why one lender’s 36-month math and another’s 84-month math on the identical account balance can produce wildly different qualifying income. A borrower who gets declined on one program’s math isn’t necessarily unqualified; they may just be sitting in the wrong divisor.
DSCR loans are for investment properties where no one lives full-time. These are business-purpose loans for investors, so lenders review them differently than a regular owner-occupied mortgage. Mainly, the property’s own rental income needs to cover the payment, subject to lender guidelines. This works differently from asset depletion. Asset depletion looks at the borrower’s personal finances, not the property’s income.
What the Investor Decision Actually Looks Like
An investor with substantial liquid assets and a rental property to purchase has a real choice, and it’s worth running before locking into one path. Selling off part of a portfolio to buy the property outright avoids a mortgage but can trigger capital gains, disrupt an allocation strategy, and pull money permanently out of markets that were compounding. Financing through asset depletion keeps the portfolio intact and working while the real estate purchase moves forward on its own track.
Picture an investor with a large brokerage and retirement balance who wants to buy a second home, but reports modest taxable income. This is a common profile for someone living off distributions instead of a paycheck. Asset allowance qualification lets that balance sheet stand in for income, without requiring the investor to sell any of it. But there’s a tradeoff: documentation runs heavier than a standard mortgage. Lenders must verify that reserves are separate from the depletion pool itself. Credit needs to clear 660 on the portfolio program’s floor. That requirement rises to 700 once the loan crosses the super-jumbo line — $3.5 million on a primary residence, or $3 million on a second home or investment property.
For a straightforward rental purchase where the property itself throws off enough rent to cover the payment, a DSCR loan is frequently the simpler, cleaner path — no personal income documentation at all, qualification runs on the property’s own cash flow instead. Lendmire’s complete DSCR loans guide walks through how that qualification works property by property. Asset depletion earns its place when the property’s rent alone wouldn’t clear a lender’s coverage threshold, or when the borrower would rather qualify off personal liquidity than lean entirely on the lease.
Investors facing this same choice show up in other high-value, seasonal markets too. Lendmire covers similar cases in asset depletion financing in Vail and asset depletion financing in Princeville. Both articles walk through similar high-net-worth qualification scenarios.
Reserves scale with loan size across the network — 3 months of reserves to $500,000, 6 months to $1.5 million, 9 months above that, plus 2 additional months per other financed property to a 12-month cap. First-time investors are held to 12 months regardless of loan size. Cash-out is available up to 60% LTV without a proceeds cap on the portfolio program, and up to $1.5 million cash-in-hand above that threshold — with a 70% ceiling scoped specifically to short-term-rental collateral and a 75% ceiling for standard rental collateral in any cash-out scenario above 60%. Final terms depend on lender guidelines, property type, leverage, and the borrower’s complete credit picture.
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.
Should an investor finance a purchase against a portfolio, or qualify based on a property’s own rent instead? Lendmire can help answer that question. We compare how asset depletion, asset allowance, and DSCR options stack up, based on credit profile, liquidity, and the specific property involved.
Frequently Asked Questions
Do I have to sell any of my investments to qualify for an asset depletion mortgage? No. The entire point of the method is that the portfolio stays invested and intact. The lender only verifies the balances exist and calculates an income figure from them — nothing gets liquidated as a condition of the loan.
Does every asset in my portfolio count at full value? No. Retirement and securities accounts get discounted before they’re counted, and business equity, unvested stock, and cryptocurrency typically don’t count at all. Only verified liquid or near-liquid holdings — cash, brokerage, retirement — make it into the eligible pool.
Is there one standard divisor every lender uses? No, and this is the most misunderstood part of the whole product. Across Lendmire’s wholesale network, asset allowance math runs on 36, 60, or 84 months depending on the borrower’s debt-to-income and loan size, and lenders in the broader market use their own timeframes. Neither the CFPB nor the OCC fixes a number, so it varies by program.
Can I use asset depletion to buy a rental property? It depends on the program. A pure rental purchase more often moves toward DSCR lender review, where the property’s own rent does the work instead.
Does having enough assets guarantee I’ll be approved? No. Assets qualify the income side of the file, but credit, reserves, debt-to-income, and property type still matter. A strong asset picture with weak credit or missing reserves can still fall short of approval, subject to lender guidelines.
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 and non-QM mortgage brokerage with investor loan programs in 40 markets, including Washington, D.C. DSCR eligibility is commonly reviewed by the lender around property-level rent rather than personal income documentation, subject to lender guidelines, and the brokerage helps arrange financing for LLC-owned portfolios beyond conventional financed-property limits. Recognized by Scotsman Guide as 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.
Get Started
Ready to find the right loan for you?
In about 30 seconds you can review financing options available for your home or investment property. No commitment required.
Informational only. Not a Loan Estimate, approval, or commitment to lend. Program availability and eligibility are subject to lender guidelines, credit approval, property review, and underwriting.
References
1. Office of the Comptroller of the Currency — Bulletin 2019-36 on Asset Dissipation Underwriting
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
Required disclosures. Lendmire (NMLS# 2371349) operates as a licensed mortgage broker, not a direct lender or depository. The discussion in this article is general in nature and should not be relied upon as financial, legal, or tax advice — every investment scenario is unique and should be reviewed by a qualified professional. Any loan inquiry is subject to lender underwriting, and this article is not a commitment to lend or a guarantee of approval. Mortgage rates, loan terms, and program guidelines vary by borrower, property, and state, and may change without notice. Equal Housing Opportunity. Verify licensure at NMLS Consumer Access.
