How Asset Depletion Sizes Income on a Jumbo Bank Statement Loan

The Quick Read: Asset depletion turns a pool of liquid assets into a notional monthly income by subtracting what the deal consumes and dividing the remainder by a set number of months. That notional income is then tested against debt, so the divisor, the account haircuts, and what the purchase itself uses up decide how large a jumbo loan the assets can support.

• Nothing is sold or withdrawn. The lender uses the balances only to calculate a theoretical income figure.
• Depletion ignores deposits. A bank statement loan does the opposite and averages 12 months of deposits.
• Down payment, closing costs, and reserves come off the pool first. The same dollars cannot qualify you and also fund the deal.
• Through select lenders in Lendmire’s wholesale network, the asset-depletion alternative on a primary residence runs up to about 80% LTV, subject to lender guidelines.
• It is mainly a primary-residence tool. A rental property is usually a DSCR conversation instead.

Picture a retiree with a large brokerage account, a paid-off home, and almost no monthly deposits. A deposit-based loan sees little income. Depletion sees the wealth. That is the whole idea, and the rest of this piece is the mechanics.

Key Terms Defined

Asset depletion: A method that converts liquid assets into a monthly qualifying income by dividing them over a set number of months.

Divisor: The number of months the pool is spread across. It is the biggest lever in the calculation.

Haircut: A discount applied to an asset for volatility or withdrawal penalties, so a retirement account counts for less than cash.

Net depletable assets: What remains of the pool after the down payment, closing costs, and reserves are removed.

Notional income: Income that exists only on paper. You do not receive it, but the lender tests it against your debts.

DTI (debt-to-income): Your monthly debts, including the proposed housing payment, as a share of qualifying income.

Reserves: Liquid funds held after closing, commonly around 6 months of the housing payment on these loans.

What Is Asset Depletion on a Jumbo Loan?

It is a way to qualify on what you own instead of what you deposit. Jumbo loans exceed conforming limits. Across the wholesale network, jumbo alt-doc files commonly run from roughly $125,000 to $3,500,000, depending on the program.

Asset depletion belongs to the non-QM world. It is not a government product. Federal ability-to-repay rules let a lender rely on income, assets, or both, and the lender must verify whatever it relies on. The CFPB’s ability-to-repay compliance guide lists income or assets as the first of eight underwriting factors and calls for third-party records. A legal-trade summary at CFS Review adds that a lender relying on assets alone must still consider and verify debt-to-income or residual income. That is why a depletion figure still runs through a DTI test.

Two terms get blurred constantly. Asset depletion converts assets into income and then tests DTI. An assets-only structure skips the conversion and leans on heavier liquidity instead. Ask a lender which one it means before you compare quotes.

How Does Underwriting Build the Number, Step by Step?

Underwriting follows a fixed order: inventory the assets, haircut them, subtract the deal’s own needs, divide by the divisor, then test DTI. Skip the order and the number comes out wrong. Here is the sequence.

1. Pick the income path. On a jumbo, you choose bank statement qualification or asset depletion. Bank statements apply an expense factor to deposits. Depletion ignores deposits and uses balances.

2. Inventory the assets. The file needs recent brokerage, retirement, and bank statements. It also needs proof of ownership and access to withdraw.

3. Apply haircuts. Cash generally counts in full. Stocks, bonds, and retirement accounts are often discounted. Exact percentages vary by program.

4. Subtract what the deal consumes. Down payment, closing costs, and required reserves come off first.

5. Divide by the divisor. Lender programs differ here, and there is no single national formula.

6. Run DTI. Notional income is added to any other documented income, such as Social Security or a pension. It is tested against the proposed housing payment and other debts.

7. Judge everything else. Credit, property, occupancy, and LTV still apply. Statements replace income paperwork, not the rest of underwriting.

The formula reads: eligible assets, minus down payment, closing costs, and reserves, divided by the depletion period, equals monthly qualifying income.

Why the Divisor Matters So Much

The divisor can swing qualifying income several times over from the same assets. Spread a pool across a long window and income looks small. Spread it across a short window and income looks large.

The arithmetic makes the point. A pool of one million dollars divided by 360 months gives a modest monthly income figure. The same pool divided by 60 months gives a monthly figure several times larger. That is pure illustration of the math, not a program figure. Longer, agency-style windows are one reason non-QM depletion produces far more income for the same borrower.

Here is the same idea as a comparison. The divisors below are illustrative only.

Across the programs we place files with, divisors do differ by lender and by file. Always ask which divisor applies before you assume a number.

How Account Types Get Treated

Account type changes how much of a balance counts. The logic is liquidity and risk.

Treatment is program-specific. Borrower age and account type can also change how retirement funds are counted. Business equity is not cash in a brokerage account, so a thin personal portfolio may point you back toward a deposit-based loan.

How Does the Notional Income Become Loan Size?

Notional income sets a ceiling on your housing payment, and the payment ceiling sets the loan. Here is the reasoning without any payment figures.

Add the depletion income to any other documented income. Subtract your existing monthly debts. What the DTI limit leaves is the room for the housing payment. A larger payment room supports a larger loan. A bigger loan, though, also raises the down payment and reserves, which shrinks the net pool and lowers the income again.

That loop is the jumbo twist. On a large loan, the deal eats a bigger share of your assets before the divisor ever applies. A borrower with a large portfolio can still land short if the purchase consumes most of it.

To work backward, start from the loan you want. Estimate the down payment and reserves it needs. Then ask whether the leftover pool, divided by the divisor, supports the payment under the DTI ceiling. On a primary residence, the asset-depletion alternative reaches up to about 80% LTV, and bank statement programs on a primary-residence purchase or rate-term refinance generally allow somewhat less leverage than that ceiling in many cases. Both are subject to lender guidelines, credit, and loan size.

Bank Statement vs. Asset Depletion vs. Assets-Only

These three methods test different things, so the right one depends on where your wealth sits.

A bank statement loan is reviewed on documented income under the applicable program, subject to lender guidelines. Income comes from deposit averages with lender-specific expense factors. For owner-occupied cash-out on a primary or second home, bank statement leverage tops out around 80% LTV, depending on loan size and credit.

Whether the two methods can be blended depends on program rules. Some lenders let depletion income stack on documented income like a pension. Others want one path only. We see that vary across lenders, so confirm it up front.

Where the General Rule Breaks

The standard flow above bends in a few named cases.

Rental property. Depletion is tied to you personally. A DSCR loan tests the property’s rent against its payment and ignores personal income. For a pure rental purchase, DSCR is usually the cleaner fit. Read the full DSCR loans guide for that route. Bank statement loans on non-owner-occupied rentals tend to top out around 75% LTV on cash-out, and investment purchase leverage varies by lender.

Occupancy changes the paperwork. An owner-occupied file is a consumer mortgage, and TRID disclosures apply. A bank statement loan on a non-owner-occupied rental, including a short-term rental, is business-purpose and exempt from TRID. Know which applies to your property.

QM versus non-QM. A qualified mortgage follows a different framework. Its Appendix Q governed income and debt calculation for the 43% General QM limit, and the rule was later amended, as Holland & Knight’s summary explains. Non-QM depletion works because ability-to-repay allows reliance on assets.

Big portfolio, no guarantee. A strong balance sheet does not ensure approval. If the calculation falls short, a lender can decline.

Common Misconceptions

“No documentation.” This is a misconception. The lender still verifies the assets it relies on with third-party records. Statements replace income paperwork, not verification.

“I have to liquidate.” No. The calculation never requires withdrawal.

“One standard formula.” No. Divisors and haircuts vary by lender.

“Funds count twice.” Assets used to qualify cannot also serve as your down payment or reserves.

What the Decision Looks Like in Practice

Start with an honest asset inventory. List each account, its type, and whether you can document ownership and access. Then decide the purpose. Primary residence with wealth in portfolios points to depletion. Strong deposits and a business point to bank statements. A rental purchase points to DSCR.

Ask any lender four questions: which divisor, what haircuts, how are down payment and reserves deducted, and what DTI ceiling applies. Those four answers explain why two quotes for the same borrower can differ so much.

Tax treatment varies; consult a qualified professional.

If your wealth sits in portfolios and you want to see how the numbers work, Lendmire can help you compare alt-doc loan options based on your assets, the property, credit profile, leverage, and your goals. Every file is underwritten individually by the lender. This is not a commitment to lend. Consumer mortgage licensing for this lane covers 16 states. Call 828-256-2183 to talk it through.

About Lendmire

Lendmire is a non-QM mortgage brokerage (NMLS# 2371349) arranging DSCR investor loans in 41 markets, including Washington, D.C. DSCR eligibility is generally reviewed around property-level rental income rather than personal income, subject to lender and program guidelines, a fit for self-employed investors and LLC-owned portfolios. Lendmire was recognized as a Scotsman Guide Top Mortgage Workplace in 2025 and 2026.

References

1. CFPB — Ability-to-Repay and Qualified Mortgage Rule Compliance Guide

2. CFS Review — CFPB Addresses Non-QMs Under Ability-to-Repay Rule

3. Holland & Knight — CFPB Amends Its Ability-to-Repay/Qualified Mortgage Rule