How To Choose Which Assets To Pledge On An Asset Depletion Mortgage — The Quick Read: Cash and fully vested brokerage holdings usually get counted first because lenders discount them the least. Retirement accounts count too, but the discount often depends on whether the borrower has passed age 59½. Business funds, unvested stock, and crypto typically don’t count at all. The right choice usually comes down to which mix produces the highest qualifying income without draining the reserves the file also needs.
Asset depletion — also called asset dissipation or asset utilization — is an underwriting method that turns a pile of liquid assets into a hypothetical monthly income figure. The Office of the Comptroller of the Currency describes it as a technique used to qualify high-net-worth borrowers. These borrowers have significant liquid assets but not enough cash flow to pass a standard debt-to-income test. Nobody sells anything. The lender just does math on statements.
That math changes a lot depending on which assets get fed into it. Two borrowers with the exact same net worth can walk away with very different qualifying-income figures, purely because of which accounts they chose to document. That’s the decision this article walks through.
Key Terms Defined
Asset depletion (or asset utilization): an underwriting method that converts a borrower’s liquid assets into a monthly income figure for mortgage qualification, instead of relying on traditional personal-income documentation.
Haircut: the percentage discount a lender applies to a given asset type before counting it — cash usually gets no discount, volatile assets get a bigger one.
Divisor: the number of months a lender divides eligible assets by to produce a monthly qualifying-income figure. Shorter divisors produce more monthly income from the same asset pool.
Seasoning: how long money has to sit in an account before a lender will count it — a large deposit that just landed usually doesn’t count yet.
DTI (debt-to-income ratio): the share of a borrower’s monthly income that goes toward debt payments; the qualifying-income figure from asset depletion gets plugged into this exact ratio.
Which Assets Actually Count?
Cash and marketable securities almost always count. Business funds, unvested equity compensation, and cryptocurrency almost never do. Retirement accounts sit in the middle — they count, but usually at a reduced value that depends on the borrower’s age.
Across the wholesale non-QM programs Lendmire works with, the accepted categories generally run: checking, savings, and money market balances; CDs; publicly traded stocks and bonds; mutual funds; and retirement accounts like 401(k)s and IRAs. On the asset-allowance path some lenders in the network use, retirement funds count at 70% of value, stepping up to 80% once the borrower is at least 59½ — a threshold that lines up with the real IRS rule that eliminates the 10% early-withdrawal penalty at that age. Before 59½, pulling from those accounts carries a real tax cost, and lenders’ haircuts are effectively pricing that friction in.
What doesn’t count, on most files: business bank accounts (even if the borrower owns 100% of the company), gifted funds, most trusts other than a revocable living trust, unvested restricted stock, and cryptocurrency. If the bulk of a borrower’s net worth sits in one of these buckets, the asset-depletion path may not help much — the pool of eligible assets shrinks fast once those categories get stripped out.
The Decision Framework: Which Assets Should You Actually Pledge?
Lead with the assets that carry the least discount. Save the ones with the biggest discount for when the file needs an extra push. Use cash first, marketable securities second, and retirement accounts third. This order usually produces the strongest qualifying-income number with the least documentation hassle.
Here’s the practical logic behind that order.
Cash and cash equivalents. Checking, savings, money markets, and CDs typically count at full face value with no haircut. There’s no age question, no volatility discount, and no tax event to think about. If a borrower has enough cash sitting around to qualify on its own, that’s often the cleanest path — fewer statements, fewer explanations, less back-and-forth on ownership verification.
Marketable securities. Stocks, bonds, and mutual funds usually get discounted to account for the fact that markets move. A borrower sitting on a concentrated position in one stock should expect that position to draw more scrutiny than a diversified brokerage account — some programs in the network review large single-position holdings case by case rather than applying a standard haircut. If the securities are diversified and liquid, they’re usually a solid second layer to add on top of cash.
Retirement accounts. These get pulled in last, mainly because the age-based haircut can swing the numbers a lot depending on where the borrower sits relative to 59½. A borrower at 61 with a large IRA might find that account counts almost as well as a brokerage account. A borrower at 45 with the bulk of their net worth locked in a 401(k) may find that same account contributes far less to the qualifying-income number, because of the discount applied to funds that aren’t penalty-free to access yet.
The order matters because reserves are a separate requirement from qualifying income. On most files in Lendmire’s network, reserves run three months of the housing payment on smaller loan amounts, stepping up to six and then nine months as the loan size grows, plus additional months for each other financed property the borrower owns. If a borrower pledges every liquid dollar toward the income calculation, there may not be enough left over to satisfy the separate reserve requirement — and cash-out proceeds can’t be used to plug that gap. That’s the single most common mistake in asset selection: over-committing the exact funds a lender also wants sitting untouched.
What Happens With Concentrated or Restricted Holdings?
Lenders typically evaluate concentrated single-stock positions and unvested equity compensation case by case, rather than applying a fixed formula. If a borrower’s net worth leans heavily on one employer’s stock, or on restricted units that haven’t vested yet, they shouldn’t expect a standard haircut to apply cleanly. Lenders look directly at concentration risk. A large position in one company behaves differently than the same dollar amount spread across a diversified fund, and underwriting tends to reflect that difference.
Margin balances add another wrinkle. If a brokerage account carries a margin loan against it, crediting the account at full statement value overstates what the borrower actually has free and clear. This is less a published rule and more a documentation detail that shows up often on brokerage-heavy files — expect the lender to net the balance before counting it.
How Does the Asset Pool Interact With Loan Size?
The bigger the loan, the more the asset pool matters relative to leverage, not just qualifying income. On Lendmire’s asset-allowance path, the calculation runs off liquid assets divided by a set number of months — 36 months on a supplemental basis when overall debt-to-income sits at or below 60%, 60 months supplemental above that threshold, or 84 months when the asset income stands alone or the loan itself is above $3,500,000. That path applies to primary residences and second homes, capped at 80% loan-to-value.
There’s also an assets-only route that skips the debt-to-income calculation entirely — it requires U.S. liquid assets equal to the loan amount, plus closing costs, plus sixty months’ worth of any net loss the borrower is carrying on other residential property. That’s a much higher liquidity bar, but it removes DTI from the conversation completely, which can matter for a borrower whose other debts would otherwise sink the ratio.
Leverage itself steps down as loan size grows. On a primary residence through select wholesale programs, purchase and rate-term leverage generally runs as high as 90% in the $300,000-to-$1,000,000 range, tightening as the loan size increases — down to roughly 75% by the $3,500,000-to-$4,000,000 band, and reviewed case by case above $4,000,000. Second homes and investment properties typically run about five points lower at every size tier than the primary-residence figures, subject to lender guidelines. Above $4,000,000, every file — asset-based or not — gets full case-by-case review before it’s even submitted, so nobody should treat any leverage figure above that size as a fixed number.
Loan sizes on the broader program run from $300,000 up to $30,000,000 combined across a portfolio non-QM bank-statement program (to $6,000,000) and a separate bank portfolio jumbo program that carries twelve-month-statement files further out, on its own leverage ladder — roughly 65% to $5,000,000, 60% to $10,000,000, and 55% up to $30,000,000, with interest-only capped at 60% loan-to-value or the band’s ceiling, whichever is lower. Above the super-jumbo lines — $3,500,000 on a primary residence and $3,000,000 on a second home or investment property — overlays tighten further: a 700 credit floor, 48-month seasoning on any credit event, and a rule that cash-out proceeds can’t be used to satisfy reserves.
A Practical Example (Modeled, Not a Quote)
Picture a borrower with three buckets: a checking and savings balance, a diversified brokerage account, and a traditional IRA. If that borrower is under 59½, the IRA carries the steepest discount of the three. Running the numbers with cash and brokerage assets first, and treating the IRA as a smaller supplemental piece, typically produces a stronger DSCR-equivalent qualifying-income figure than leading with the IRA and backfilling with cash.
If the same borrower is past 59½, the IRA’s discount narrows, and the order of accounts matters less. At that point, the choice comes down more to which accounts are easiest to document with clean, consecutive statements. Gaps or unexplained large transfers can slow down underwriting review.
This is a modeled scenario to illustrate the mechanics, not a quote of any specific file or borrower.
Where DSCR Loans Fit Into This Picture
Asset depletion is mainly a personal-financing tool. It’s built for a primary residence, a second home, or for showing reserve strength. It generally has nothing to do with how a rental property itself gets financed. For an investment property purchase, a DSCR loan looks at the property’s own rental income against its payment obligation. It qualifies mainly on whether property-level rental income covers the payment, subject to lender guidelines — not on the borrower’s personal balance sheet at all.
This distinction matters for planning your approach. Say an investor has substantial liquid wealth and is adding a fifth or sixth rental property. That investor typically does better letting the property’s rent carry the file, rather than running personal assets through a depletion formula for that purchase. Personal assets tend to matter more in the reserves conversation instead. Lenders want a liquid cushion — separate from the down payment — to cover vacancy or repairs. This isn’t usually treated as an income-replacement calculation. Investors deciding whether to document business income or property income for a rental purchase can also compare paths through Lendmire’s trust asset qualification guidance, which covers a related but different scenario.
What Investors Should Watch For
A few patterns show up often enough to flag directly. First, business bank accounts almost never count on their own — only transfers that have already moved into the borrower’s personal account count, and typically at full value. Second, large unexplained transfers close to application tend to slow things down; seasoning matters, and money that hasn’t sat in an account long enough usually doesn’t count yet. Third, over-pledging cash to maximize qualifying income can leave a file short on the separate reserve requirement, which is a different bucket entirely and can’t be backfilled with cash-out proceeds.
Fourth — and this trips up more borrowers than any other single item — retirement account treatment isn’t uniform across lenders or across ages. A borrower sitting close to 59½ might genuinely benefit from timing an application on the favorable side of that birthday, since the discount applied to those funds can shift meaningfully at that threshold.
Regulation Z sets rules for checking income and assets. Lenders must verify these amounts using third-party records that give reasonably reliable evidence. This comes from the eCFR’s Ability-to-Repay standard. That’s partly why consecutive, unedited statements matter more than a single account snapshot.
Tax treatment can depend on how funds are used and how accounts are structured; investors should keep clear records and speak with a qualified tax professional before assuming any particular tax outcome from choosing one asset over another.
This article is for general informational purposes only and isn’t legal or tax advice. Readers should consult a qualified attorney or CPA about their own situation before making decisions based on asset depletion qualification.
Frequently Asked Questions
Should I pledge my brokerage account or my retirement account first?
Generally, cash and marketable securities go first because they typically carry a smaller haircut than retirement funds, especially for borrowers under 59½. Retirement accounts often work better as a supplemental piece once the age-based discount narrows.
Do I have to sell any of the assets I pledge?
No. Asset depletion is a hypothetical income calculation for qualification purposes — the underlying assets stay invested and untouched unless the borrower separately chooses to liquidate them for another reason.
Can I use money my business just transferred to my personal account?
Often, yes. On most files in Lendmire’s network, transfers from a borrower’s own business into a personal account count at full value, while funds still sitting in the business account typically don’t count at all until they’re moved and seasoned.
What if most of my net worth is in unvested company stock?
That’s typically evaluated case by case rather than through a standard haircut, since unvested restricted stock doesn’t behave like cash or a fully vested security. Borrowers in that position should expect more individualized underwriting review.
Does the asset mix I choose affect my leverage, not just my qualifying income?
Loan-to-value limits are generally set by loan size, occupancy, and credit profile rather than by which assets fund the income calculation — but the asset-allowance path itself is capped at 80% loan-to-value on primary residences and second homes, 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 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. Office of the Comptroller of the Currency, Bulletin 2019-36
2. IRS, Retirement Topics – Exceptions to Tax on Early Distributions
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.
