Asset Depletion Mortgages In Portsmouth — The Quick Read: Asset depletion underwriting turns a borrower’s liquid and investment holdings into a monthly income number, without a paycheck in sight. A lender takes verified account balances, applies discounts for volatility and access limits, then divides the result by a set number of months. That figure gets treated like income on the loan application. It’s a real underwriting method that federal regulators monitor for safety, but no single agency sets the formula — every wholesale program builds its own math.
That last point matters more than most borrowers realize. Two lenders can look at the same brokerage statement and land on two very different qualifying numbers. This piece walks through how the calculation actually works, where lenders in a wholesale network diverge, and where the general rule breaks down.
Key Terms Defined
Asset depletion (or asset dissipation) underwriting is a method that converts a borrower’s verified assets into an imputed monthly income figure instead of relying on pay stubs or traditional personal-income documentation.
Haircut is the discount a lender applies to a volatile or restricted asset — stocks, retirement funds — before it counts toward qualifying income.
Divisor is the number of months a lender divides the discounted asset pool by to produce the monthly income figure. Programs vary this widely — 36, 60, 84, and longer periods all show up across the market.
Repayment-capacity (repayment-capacity) rule is the federal requirement that a lender make a good-faith, documented determination that a borrower can actually repay the loan, regardless of which income or asset method it uses.
DTI (debt-to-income ratio) compares a borrower’s monthly debt obligations to their monthly income — including any imputed asset-based income — and caps how much new debt a lender will approve.
What Problem Is This Actually Solving?
The typical candidate is asset-rich and income-light on paper. Think of a retiree living off a portfolio, a business owner whose traditional personal-income documentation is full of legitimate deductions, or an investor whose K-1s understate real cash flow. Conventional underwriting looks at that file and sees almost no qualifying income. Asset depletion looks at the same file differently — it sees a balance sheet that can comfortably support a payment.
The OCC’s Bulletin 2019-36 is the clearest regulatory touchpoint here. It reminds banks that asset dissipation underwriting is a real, permissible method — but one that requires the bank to build its own defensible policies around eligible assets, discounts, and documentation. The OCC does not hand out a formula. It hands out a governance requirement. That’s exactly why the math looks different from one lender’s guidelines to the next.
How the Calculation Actually Works, Step by Step
Step 1 — Inventory the eligible assets. Underwriters start with verified checking, savings, brokerage, and retirement balances. Business funds, gift funds, trusts other than a revocable living trust, unvested stock, and cryptocurrency typically don’t make the list at all on most wholesale programs.
Step 2 — Apply discounts to volatile holdings. A dollar sitting in a checking account isn’t treated the same as a dollar in an equity portfolio. Across the programs Lendmire places files with, retirement accounts commonly count at 70%, stepping up to around 80% once a borrower clears age 59½ and can access the funds without penalty. This lines up with the OCC’s own expectation that banks build in discounts for liquidity and price volatility before crediting an asset’s full value.
Step 3 — Age-gate retirement funds. Money a borrower can’t touch without an early-withdrawal penalty is often excluded outright, not just discounted more heavily. This is one of the most common reasons a borrower assumes their retirement balance counts in full and then finds out it doesn’t.
Step 4 — Pick the divisor and run the math. This is where lender choice matters most. On the wholesale side, an asset allowance calculation divides liquid assets by 36 months when it’s supplementing other income and the borrower’s overall DTI sits at or below 60%, by 60 months when DTI runs above that, or by 84 months when the asset income has to stand alone — or on any loan above $3,500,000, where the longer divisor is required regardless of DTI. A longer divisor produces a smaller monthly income figure but is more conservative; a shorter divisor produces more qualifying income but concentrates the drawdown faster.
Step 5 — Blend it with any other income. The imputed monthly figure doesn’t replace everything else on the application. It sits alongside wages, distributions, or rental income and feeds into the standard DTI calculation, which most programs in the space cap around 50%.
Step 6 — Document everything. There’s no W-2 to lean on, so the file leans on statements. The CFPB’s Ability-to-Repay rule requires a lender to make a documented, good-faith determination of repayment ability no matter which path it uses — asset-based qualification still has to hold up to real verification, not a token balance screenshot.
The Assets-Only Path — When No DTI Calculation Happens at All
Some files skip the income-conversion math entirely. On the assets-only path, a borrower qualifies with no DTI calculation as long as verified U.S. liquid assets equal the loan amount, plus closing costs, plus sixty months of any net loss carried on other residential property. This is a different animal from asset allowance — it’s a liquidity test, not an income-replacement formula, and it tends to fit borrowers whose balance sheets are large relative to the loan size they’re requesting.
Where the Leverage Actually Lands
Program size and occupancy drive how much a lender will lend against an asset-qualified file. On a primary residence, leverage through select wholesale programs typically runs as high as 90% on loans in the $300,000–$1,000,000 range, stepping down as the loan size grows — 85% through roughly $2,000,000, 80% through $3,000,000, then tighter still above that. Once a file crosses $4,000,000, every one of these deals gets reviewed case by case before submission, and leverage drops accordingly — the ladder in that territory runs closer to 65% and tightens further past $5,000,000. Second homes and investment properties generally run about five points lower than the primary-residence ceiling at any given size.
The asset allowance path caps out at 80% LTV. On most programs, it applies only to primary and second homes — it isn’t built for a straight rental purchase. This is an important distinction for investors. A rental property purchase usually needs a different qualification lens entirely. That’s where a property-income-based structure like a DSCR loan tends to fit better. DSCR loans are business-purpose, non-owner-occupied products. Because they’re business-purpose, lenders review them differently than a standard owner-occupied mortgage. This includes sitting outside the ATR/QM framework that governs asset depletion on a primary residence.
Where This Overlaps With DSCR Financing
Asset depletion and DSCR financing solve two different math problems, and it’s worth being precise about the difference. DSCR underwriting looks at the property — does the rent cover the payment. Asset depletion looks at the borrower — does the balance sheet support the payment. They’re not competing products; they’re complementary tools that sometimes get used together.
The overlap shows up most often as a compensating factor. An investment property that falls a little short of full coverage on rent alone doesn’t automatically get declined on every program. Sub-1.00 coverage ratios are available through select lenders in Lendmire’s network — but leverage and terms adjust when the ratio dips below full coverage, and verified liquid assets can be part of what makes that adjustment work. An investor sitting on a strong portfolio but a marginally tight rent roll on one property isn’t necessarily stuck; the asset side of the file can offset the property side. That’s a different mechanism than qualifying the whole loan on assets — it’s using the balance sheet to shore up a DSCR file, not replace it.
Are you weighing the two options side by side? Lendmire’s broader breakdown of how asset depletion structures compare across markets covers the same mechanics from a different angle. The DSCR versus asset-based comparison is worth a look too, especially if the rental-property math is your more pressing question.
Where the General Rule Breaks Down
The clean version of asset depletion — inventory assets, discount, divide, done — has real exceptions that trip up borrowers constantly.
Retirement funds locked before 59½ often get zeroed out, not discounted. If most of a borrower’s net worth sits in a 401(k) they can’t touch yet, the qualifying picture can look far worse than their actual net worth suggests.
Income with a shelf life gets treated more conservatively than income that doesn’t run out. A drawdown-based income stream — spending down a portfolio over time — reads differently to an underwriter than Social Security or a pension, which have no expiration date. Lenders generally want to see that drawdown income can continue for a meaningful stretch, not just cover the next twelve payments.
Business funds don’t count, even when they sit in an account the borrower controls. On most wholesale programs, only funds already transferred into a personal account can count toward qualifying income or assets. And even then, they only count after documentation ties them to the borrower’s own business at sufficient ownership.
Above $3,500,000 on a primary residence (or $3,000,000 on a second home or investment property), every file steps into super-jumbo territory. That means a 700 credit floor, clean housing history, 48-month seasoning on any credit event, and no non-occupant co-borrowers. The math doesn’t change conceptually, but the guardrails tighten considerably. Every one of these files gets reviewed case by case before it ever goes to submission.
Cash-out has its own ceiling. On the portfolio program, cash-out is uncapped at or below 60% LTV but caps at $1,500,000 cash-in-hand above that threshold — a detail that surprises borrowers who assume asset-based qualification means unlimited flexibility on the cash-out side. These specifics are subject to lender guidelines and a full review of property, leverage, and credit.
Common Misconceptions Worth Clearing Up
A dollar in the account is not automatically a dollar of qualifying income. Every asset class gets some form of discount before it enters the math. Asset depletion is not a government program with a published formula. It’s a bank underwriting method. A regulator monitors it for safety and soundness, per the OCC bulletin, without dictating the mechanics. It’s also not the same tool as a bank-statement loan — one reads deposit cash flow, the other reads a balance sheet, and they answer different underwriting questions. Documentation type has nothing to do with credit risk. The CFPB’s Ability-to-Repay summary makes clear that no-doc loans can’t earn QM status. That’s exactly why any legitimate asset depletion program still requires real, verifiable statements — never a token asset list.
The Investor Decision in Practice
For a borrower with strong liquidity and thin reported income, the practical question isn’t whether asset depletion exists — it’s which divisor, which occupancy type, and which leverage band fit the specific file. A shorter divisor produces more qualifying income but draws down the asset pool faster on paper. A longer 84-month divisor is more conservative and becomes mandatory once a loan crosses $3,500,000. Choosing between asset allowance and an assets-only structure often comes down to whether the borrower wants a smaller loan with no DTI test at all, or a larger loan supported by imputed income alongside whatever else shows up on the application.
Reserve requirements layer on top of all of it. Typically, you need 3 months of reserves on loans to $500,000, 6 months through $1,500,000, and 9 months above that. You’ll also need additional reserves for each other financed property you carry, up to a 12-month ceiling. First-time investors usually see a flat 12-month reserve requirement, regardless of loan size. None of these figures are guarantees. Every one of them runs through full underwriting subject to lender guidelines, and program terms shift. So you should confirm your specific file with current guidelines before you plan around a particular number.
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.
Are you weighing an asset-based mortgage against a straight rental-income structure? Lendmire is a mortgage broker. It works through select lenders across a 40-market wholesale footprint, including Washington, D.C. Lendmire can help you sort out which path actually fits your file. That means looking at your assets, the property, your leverage target, and your goal.
Frequently Asked Questions
Do retirement accounts count in full toward asset depletion income?
No. Retirement balances typically count at a discount — commonly around 70% — and that discount can improve once a borrower reaches 59½ and can access the funds without penalty. Money locked before that age is often excluded from the calculation entirely rather than simply discounted more.
Can asset depletion be used to buy a rental property?
The asset allowance structure is generally built for primary and second homes, not straight rental purchases. For non-owner-occupied properties, a property-income-based structure like a DSCR loan is usually the better fit, though verified assets can sometimes serve as a compensating factor on a marginal DSCR file, subject to lender guidelines.
What’s the difference between the divisor a lender uses and my actual account balance?
The divisor is the number of months a lender spreads the discounted asset value across to create a monthly income figure — it isn’t your balance, it’s the balance divided down. A 36-month divisor produces more monthly income than an 84-month divisor on the same asset pool, but the longer divisor is treated as more conservative and becomes required on larger loans.
Does asset depletion mean I don’t need any other documentation?
No. Verification is still required — statements, account ownership, and often continuance documentation on drawdown income. The file substitutes asset records for pay stubs; it doesn’t eliminate documentation altogether.
Is there a maximum loan size for asset-based qualification?
Loan sizes on these structures generally range from $300,000 up to $30,000,000 across a portfolio non-QM program and a separate bank portfolio program with its own leverage ladder, though every loan above $4,000,000 gets reviewed case by case before submission, and leverage tightens considerably at the top of that range.
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
As a DSCR and non-QM mortgage broker, Lendmire — NMLS# 2371349 — connects investors with wholesale lending channels across 40 markets, including Washington, D.C. The property’s rental income, not the borrower’s tax returns, is central to lender review, which works for self-employed operators and portfolios beyond four financed properties. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
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References
2. CFPB — What is the Ability-to-Repay Rule?
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.
