Asset Depletion Mortgages In Sanibel — The Quick Read: Asset depletion underwriting turns a borrower’s liquid balance sheet into a qualifying income figure instead of relying on traditional personal-income documentation or a paycheck. A lender totals eligible assets, applies haircuts by asset type, subtracts funds needed for the deal, and divides what’s left by a set number of months. The resulting figure drops into a standard debt-to-income calculation like any other income line. Nothing gets sold, and no lender liquidates the account — the math is the whole product.
Key Takeaways
- Asset depletion converts liquid assets into a monthly qualifying income figure using a divisor — the number of months is a lender policy choice, not a fixed industry rule.
- The account balance is never touched. The calculation supports a debt-to-income ratio; it doesn’t trigger a withdrawal or a sale.
- Retirement accounts, brokerage holdings, and cash all get treated differently — haircuts and age thresholds change the math meaningfully.
- Some assets never count no matter how the divisor is set: unvested equity, restricted trusts, business equity beyond a discounted percentage, and freshly deposited funds without a paper trail.
- For a rental property purchase specifically, a business-purpose DSCR loan that is reviewed on the property’s own rental income is often the more direct path — and the two approaches can be combined on some files.
What Asset Depletion Underwriting Actually Is
Asset depletion is also called asset dissipation or asset amortization underwriting. It takes a borrower’s liquid net worth and turns it into a hypothetical income stream for qualification purposes. A federal banking regulator gives this concept a formal definition. The OCC Bulletin 2019-36 describes it as a method that “uses an applicant’s assets to calculate a hypothetical cash annuity stream.” That’s the whole idea in one sentence: a balance sheet stands in for a pay stub.
This matters most for borrowers whose real financial strength doesn’t show up on a tax return. A retiree with several million dollars in a brokerage account and modest reported distributions can get declined under conventional income rules that a salaried applicant with no savings sails through. A recent business seller, a founder between liquidity events, or an investor who structures income through multiple entities all run into the same wall. Asset depletion reads the balance sheet instead of the pay stub.
It’s worth separating two things that both get called “asset depletion” because conflating them causes most of the bad advice floating around this topic. One version is written to agency guidelines and sold into the conforming market. The other is a non-QM version, written to an individual lender’s own guidelines, and either held in portfolio or placed privately. The agency version exists mostly as a contrast point here — the programs that actually serve high-net-worth borrowers with complex income are almost entirely non-QM.
Key Terms Defined
Depletion period (or divisor): the number of months a lender uses to spread eligible assets into a monthly qualifying income figure. Shorter divisors produce a higher income figure per dollar of assets; longer divisors produce less.
Haircut: a percentage reduction applied to certain asset types — retirement accounts, brokerage holdings, business equity — before they enter the calculation, meant to account for volatility or access restrictions.
Eligible assets: the pool of accounts a lender will actually count. Fully liquid, sourced, and accessible funds generally qualify; locked, unvested, or unsourced funds generally don’t.
Qualifying income: the monthly figure produced by the asset math once it’s calculated. From that point forward, it behaves exactly like a documented income line inside a standard debt-to-income calculation.
How Underwriting Treats Asset Depletion, Step by Step
The math is consistent across the non-QM world even where the specific inputs differ file to file.
1. Total the eligible asset pool. The lender identifies every account it will count — checking, savings, brokerage, retirement — and excludes anything illiquid or restricted.
2. Apply haircuts by asset type. Retirement funds, investment accounts, and business or real estate equity each get reduced by a program-specific percentage before they enter the formula. Cash and fully liquid accounts typically count without a discount.
3. Subtract what the transaction itself requires. Funds needed for the down payment, closing costs, and post-closing reserves come out of the pool before the divisor is applied — that money is spoken for, not available to generate income.
4. Divide by the depletion period. What remains gets divided by the program’s month count to produce a monthly qualifying income figure. That divisor is the single biggest lever in the whole calculation, and the OCC’s bulletin confirms it as a matter of individual lender policy rather than a fixed market standard.
5. The figure flows into a standard DTI calculation. From here it functions exactly like a documented paycheck. No account gets touched, no shares get sold, and nothing gets pledged as collateral beyond the property itself.
Underwriters also look past the total and study the shape of the pool. A file where assets have sat in the same accounts for months tells a cleaner story than one assembled the week before application. Large recent deposits without a clear source, or a pool that doesn’t match the size of the loan being requested, slow a file down even when the math on paper works.
Rental purchases often mix in income from the property itself, along with asset math. The rent figure typically comes from forms the industry has used for years. For one-unit properties, lenders use the Single-Family Comparable Rent Schedule (Form 1007). For two-to-four-unit buildings, they use the Small Residential Income Property Appraisal Report (Form 1025). Both forms are defined in the Fannie Mae Selling Guide. DSCR loans sit entirely outside agency guidelines as business-purpose products. Still, the industry borrows this appraisal methodology widely. It’s the only standardized way to document long-term market rent.
The Structures and Variations That Exist
There isn’t one asset depletion program — there are several shapes, and the differences change outcomes more than borrowers expect.
Through select lenders in Lendmire’s wholesale network, one common structure treats the asset figure as a supplement, not the whole story. Liquid assets get divided by 36 months when the file’s overall debt-to-income sits at or below 60%, or by 60 months when it runs above that threshold — both used to boost a documented income picture that’s close but not quite there on its own, typically on primary and second homes up to 80% loan-to-value. A separate 84-month divisor applies when asset income has to stand alone, or on any loan size above roughly $3,500,000, where the math needs to carry more of the qualification weight by itself.
There’s also an assets-only path, which drops the debt-to-income calculation entirely. It requires U.S.-based liquid assets equal to the full loan amount, plus closing costs, plus sixty months of coverage for any documented net loss on other residential real estate the borrower holds. This is the path for someone whose liquidity is deep but whose income documentation is thin or nonexistent.
Retirement accounts get their own treatment across these structures. Lenders typically count them at 70% of value. That stepping-up moves to 80% once the borrower clears age 59½. Certain categories never count at any percentage. These include unvested stock, cryptocurrency, business funds beyond what’s already been distributed, and trusts other than a standard revocable living trust.
On the size side, asset depletion and bank-statement income programs through this network run from roughly $300,000 to $30,000,000 across two overlapping structures — a portfolio non-QM program carrying files to $6,000,000, and a bank portfolio program carrying twelve-month statement files on its own ladder up to $30,000,000, stepping down to 65% loan-to-value near $5,000,000, 60% near $10,000,000, and 55% near the $30,000,000 ceiling, with interest-only capped at 60% loan-to-value or the band’s own ceiling, whichever is lower. Every file above $4,000,000 goes through case-by-case review before it’s even submitted — that’s not a formality, it’s how these programs actually get priced and structured at that size. Leverage on a primary residence steps down as loan size climbs too: as high as 90% under $1,000,000, dropping through the 80s in the low millions, down toward 65% and below once a file crosses into the case-by-case range above $4,000,000. Second homes and investment properties generally run about five points lower than a primary residence at every size tier.
Credit requirements move with the size of the loan. Most files clear with a 660 score; anything crossing into super-jumbo territory above roughly $3,500,000 on a primary residence typically needs 700 or better, along with deeper reserve requirements — 3 months of reserves on smaller balances, stepping to 9 months or more as loan size and risk increase.
Investors weighing this against a rental-specific loan should look at Lendmire’s complete DSCR loans guide. It covers how a property-income-based loan is reviewed on rent instead of a personal balance sheet. That’s the structural fork this article gets into next.
Where the General Rule Breaks: Named Edge Cases
The formula looks clean on paper. In practice, several situations break the general rule entirely — not with a bigger haircut, but with a hard exclusion.
Unvested equity doesn’t get a discount — it gets excluded. A founder or executive holding a large unvested RSU grant may be sitting on real paper wealth that simply isn’t eligible until it vests. No percentage, however generous, brings it back into the pool. This is a structural gap, not a stricter haircut.
Age 59½ is a hard line for retirement accounts. Below that age, early-withdrawal penalties get factored into the math and reduce what counts. Past it, full or near-full credit on 401(k) and IRA balances becomes standard, and a program still discounting heavily past that threshold is pricing the file worse than it needs to.
Required minimum distributions can overlap with — or replace — asset depletion math on the same dollars. Per IRS guidance, traditional IRA owners generally must begin required minimum distributions the year they turn 73. If that distribution is already documented and countable as income, asset depletion should fill the remaining gap rather than double up on dollars already being counted elsewhere.
Fresh, unseasoned deposits get discounted or excluded outright. A large deposit that shows up right before application — even a legitimate gift or inheritance — typically needs seasoning or a documented paper trail before it counts at full value.
Illiquid or locked assets don’t count regardless of the haircut applied to everything else. Trust funds with restricted access, vested-but-locked equity compensation, and similar holdings generally get excluded entirely rather than discounted.
Business equity and real estate equity get separately, and often more aggressively, discounted than cash or public securities — the underwriting logic treats them as harder to value and harder to convert quickly.
Short-term rental income doesn’t fit the standard rent forms. Form 1007 was built to estimate long-term monthly market rent, not nightly pricing or seasonal occupancy. An investor layering rental income from a short-term rental into a file alongside asset math should expect the appraisal and underwriting approach to look different from a standard long-term-rent scenario. Short-term rental rules can also vary by city, county, HOA, and property type, so investors should confirm local rules before relying on projected rental income at all.
Asset Depletion vs. DSCR: The Investor Decision
For a rental-property investor, a more useful question usually comes up. It’s not “how does my asset pool get discounted.” It’s whether the property itself should do the qualifying work instead. A DSCR loan is reviewed primarily on property-level rental income covering the payment, subject to lender guidelines. This approach sidesteps the personal balance-sheet math entirely.
That distinction plays out differently depending on the investor. Someone with a strong personal net worth but a property that doesn’t yet cash-flow cleanly may need asset depletion to bridge a personal debt-to-income gap that the property alone can’t close. An investor whose property rents well but whose personal financials are complicated — heavy depreciation, multiple LLCs, seasonal self-employment income — often finds a DSCR loan the cleaner route, since it removes the personal-income question from the file entirely.
Programs in Lendmire’s network below a 1.00 coverage ratio do exist for select borrowers. But loan-to-value and terms adjust to compensate. A lower coverage ratio doesn’t come with the same leverage a strong-cash-flow property gets. The two approaches aren’t always mutually exclusive, either. On some files, asset-based income can supplement a DSCR file that’s close to clearing 1.00 but not quite there on its own. This means an investor’s balance sheet can directly expand purchasing power, even on a loan that’s technically qualifying on the property.
A related comparison lives in Lendmire’s coverage of asset depletion mortgages in Jupiter and in its Islamorada asset depletion breakdown, both of which walk through the same mechanics against different buyer profiles.
Here’s a misconception worth killing directly: selling assets to show more visible cash usually backfires. It can trigger capital gains. And it undoes the entire point of asset-based qualification. That approach exists precisely so statements — not forced liquidation — carry the file.
Tax treatment can depend on how funds are used and how a property is titled; investors should keep clean records and talk to a qualified tax professional before relying on any deduction assumption.
Lendmire arranges these files as a broker working with select lenders across its wholesale and portfolio network. Its consumer mortgage lending operation is currently licensed in 16 states, including Florida. Are you weighing asset depletion against a rental-income-based loan on a specific property? Lendmire can help you compare the options. This comparison looks at the asset pool, the property’s income, credit profile, leverage, and overall investor goals.
Frequently Asked Questions
Does an asset depletion loan require me to sell my investments? No. The calculation is a qualifying formula, not a withdrawal or liquidation requirement. The lender divides eligible assets by a set number of months to produce an income figure — the account itself stays untouched.
Is there one standard divisor every lender uses? No. The divisor is a lender policy choice, not a fixed industry number, confirmed directly by the OCC’s own bulletin. Through select lenders in Lendmire’s network, common structures use 36 or 60 months as a supplement to other documented income, or 84 months when the asset figure has to stand alone.
Are asset depletion loans and DSCR loans the same thing? No, and conflating them causes most of the confusion around this topic. Asset depletion converts personal assets into income for a personal debt-to-income calculation. A DSCR loan evaluates the property’s own rental income against its own payment and doesn’t use personal DTI at all.
Does my retirement account get discounted the same way at every age? No. Programs in this network typically count retirement funds at 70% of value, stepping up to 80% once the borrower is past 59½. Distributions already being taken as required minimum distributions should be reviewed alongside — not stacked on top of — any asset depletion calculation on those same funds.
Can asset income and rental income be combined on the same file? In some cases, yes. On certain files, asset-based income can supplement a DSCR file that’s close to a 1.00 coverage ratio but hasn’t quite cleared it, which can expand what an investor qualifies for beyond what the property’s rent alone would support.
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 built around DSCR investor lending, with programs available in 40 markets, including Washington, D.C. DSCR lenders commonly evaluate rental-income coverage instead of personal income paperwork — a practical fit for LLC-owned and multi-property investors. Terms vary by lender, property, leverage, and program. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
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References
2. Fannie Mae Selling Guide — Appraisal Report Forms and Exhibits
3. Class Valuation — Why Form 1007 Can’t Be Used for Short-Term Rentals
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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Compliance and disclosures. Lendmire (NMLS# 2371349) is a licensed mortgage broker and is not a direct lender, depository institution, financial advisor, or tax professional. Content in this article is general market analysis and educational information — not financial, legal, or tax advice for any specific situation. Lendmire does not guarantee loan approval; every transaction is subject to underwriting by the funding lender. Mortgage pricing and loan program guidelines are subject to change at any time without notice and vary by borrower characteristics, property type, and state regulations. Lendmire complies with Equal Housing Opportunity. Licensure verification: NMLS Consumer Access.
