Asset Depletion Loans: Qualify With Your Savings

What is an asset depletion loan?

An asset depletion loan is a mortgage that treats your savings and investments as a source of income. Instead of asking for pay stubs or tax returns showing what you earn, the lender calculates how much monthly income your assets could provide over time. It is also called asset utilization or asset qualifier.

It is a Non-QM (non-qualified mortgage) loan. Because income is derived from assets rather than documented earnings, it generally falls outside the Consumer Financial Protection Bureau (CFPB) Qualified Mortgage definition. The lender still must make a reasonable, good-faith determination that you can repay, and your assets are the evidence it uses.

The name sounds alarming, but you do not have to spend down your accounts. Depletion describes the lender's math, not a requirement to withdraw anything.

How asset depletion income is calculated

The lender totals your eligible assets, subtracts what you will use for the down payment, closing costs, and required reserves, and divides the remainder by a set number of months. The result is treated as monthly income.

Not every dollar counts equally. Lenders commonly apply a haircut, meaning a percentage reduction, to retirement and investment accounts to reflect market swings, taxes, and early-withdrawal penalties. Cash in checking and savings is usually counted at or near full value. Here is an illustrative example with round numbers:

Step	Illustrative amount
Checking and savings	$400,000 counted at 100% = $400,000
Brokerage account, $500,000 with illustrative 20% haircut	$400,000
Retirement account, $600,000 with illustrative 40% haircut	$360,000
Total eligible assets	$1,160,000
Less down payment, closing funds, and reserves	$200,000
Remaining assets used for income	$960,000
Divided by an illustrative 240 months	$4,000 per month

The number of months, the haircut percentages, and how reserves are handled all vary by lender and program. A shorter divisor produces more monthly income from the same assets, which is why terms differ so much across lenders.

Which assets count and which do not

Assets generally need to be liquid, meaning you can turn them into cash without selling a business or a property. Accounts that typically count include:

Checking, savings, and money market accounts.
Certificates of deposit.
Stocks, bonds, and mutual funds in brokerage accounts.
Retirement accounts you can access, such as an individual retirement account (IRA) or 401(k), usually after a haircut.

Assets that usually do not count include home equity and other real estate, ownership in a private business, vehicles, collectibles, and cryptocurrency, though a few programs treat some of these differently. Money that only recently arrived may need a paper trail showing where it came from. If you are under the age when retirement withdrawals are penalty-free, the lender may apply a larger haircut or require proof you can access the funds.

Jointly held accounts usually count only if every owner of the account is a borrower on the loan, or if the other owners sign a letter confirming you can use the funds. Accounts held in a trust or a business may need extra documentation showing your access.

Who an asset depletion loan fits and who it does not

An asset depletion loan fits people whose wealth is in their accounts rather than their paychecks. Common situations include:

Retirees who have not started Social Security or pension payments, or whose fixed income alone is modest.
Early retirees living on savings.
Borrowers who sold a business or property and hold the proceeds in cash or investments.
High-net-worth borrowers with irregular income who prefer not to rely on tax returns.

It is a weaker fit if most of your net worth is home equity or business ownership, since those assets usually do not count. It can also be a weaker fit if your assets barely exceed what the down payment and reserves require, leaving little to convert into income. Many lenders let you combine asset income with other documented income, such as a pension. If you have business income instead, compare a bank statement loan.

Documents you will typically provide

Because your accounts are the income, the asset documentation has to be complete. Expect to provide:

The most recent consecutive statements for every account you want counted, all pages.
For retirement accounts, statements plus terms showing you can withdraw funds.
Documentation for any large deposits, such as a closing statement from a property sale.
Documentation for any other income you want included, such as pension or Social Security award letters.
Photo ID and authorization to pull credit.

Lenders may re-verify balances shortly before closing. Avoid moving money between institutions during the process unless you can document every step. The Non-QM document checklist covers each program.

Tradeoffs and costs in plain terms

An asset depletion loan usually carries a higher rate than a conventional loan. The lender is relying on calculated income instead of documented earnings, and Non-QM pricing reflects that.

The math can also understate your real capacity. A long divisor and steep haircuts may turn a large portfolio into a modest monthly figure. In those cases, a larger down payment can reduce the loan amount enough to fit, though that also means more of your money tied up in the home.

If you are buying a rental property, ask whether the loan includes a prepayment penalty. Investor loans are more likely to have one. Also weigh the opportunity cost: paying a higher rate to avoid selling investments can make sense, but only after you compare the total cost over the years you expect to keep the loan.

Asset depletion vs. a conventional loan or paying cash

Asset depletion sits between a traditional income-based mortgage and buying the home outright.

Option	How it works	Main tradeoff
Asset depletion loan	Assets converted into qualifying income	Usually higher rate, assets stay invested
Conventional loan	Qualifies on documented income; agency guidelines may also allow some asset-based income in limited cases	Usually lower rate, stricter documentation
Paying cash	No loan	No interest cost, but less liquidity

If pension, Social Security, or other documented income already supports the payment, a conventional loan is often cheaper. If it does not, asset depletion lets you keep a portfolio invested while still buying. The Non-QM vs. conventional guide explains how to compare total cost.

Who commonly uses asset depletion loans

Borrowers who commonly look at an asset depletion loan include:

Retirees who want to buy, downsize, or move closer to family and whose fixed income alone looks modest on paper.
Early retirees living on savings and investments.
Owners who sold a business or property and now hold the proceeds in cash or investment accounts.
Borrowers with substantial savings whose income is irregular.

Depending on the lender, the program can be used for single-family homes, condos, townhomes, and 2 to 4 unit properties, as a primary home, second home, or investment property. Conforming loan limits are set by county, so if you are also weighing a conventional loan, check the FHFA conforming loan limit values for the county where the home is located. Terms, eligibility, and documents vary by lender and are confirmed by a licensed loan officer. For background on how these programs differ from agency loans, read what a Non-QM loan is.

How to get started with Mortza

Tell the Mortza AI advisor the approximate balances in each type of account, your age, any other income, and the home you have in mind. It estimates asset-based income, shows how haircuts and reserves affect the result, and lists which statements to gather.

The AI advisor does not approve loans. A licensed loan officer reviews your scenario and statements, confirms which programs fit, and gives you real terms. Talk to Mortza to get started.

Common questions

Do I have to withdraw money from my accounts for an asset depletion loan?

No. The lender calculates income as if the assets were drawn down over time, but you are not required to withdraw anything to make your payments. You do need the funds for the down payment, closing costs, and any required reserves, and the accounts should remain in your name with documented access through closing.

Can I count my 401(k) or IRA for asset depletion?

Usually, yes, if you can access the funds. Lenders commonly apply a haircut to retirement accounts to reflect taxes, market changes, and possible early-withdrawal penalties. If you are younger than the age when withdrawals are penalty-free, some lenders apply a larger reduction or ask for proof that you can withdraw. Requirements vary by lender and program.

Can I combine asset depletion with Social Security or a pension?

Many lenders allow it. You document the fixed income with award letters or statements, and the lender adds the asset-based income to it. Combining income sources can reduce how much the assets need to provide, which may help you qualify for a larger loan or a lower debt-to-income ratio.

Does home equity count toward asset depletion?

Generally no. Asset depletion programs focus on liquid assets you can access without selling property, such as bank, brokerage, and accessible retirement accounts. Equity in your current home or other real estate usually does not count as an eligible asset, although proceeds from a completed sale can count once they are deposited and documented.

Can I use an asset depletion loan for an investment property?

Many programs allow investment properties as well as primary and second homes. For a rental, also compare a debt service coverage ratio (DSCR) loan, which qualifies on the property's rent rather than your assets. Investment property loans can carry different pricing and may include a prepayment penalty, so review the full terms.

Loans using your savings: qualify for a mortgage with your assets (asset depletion)