Asset Depletion Loan
A non-QM loan that converts your liquid assets into a calculated monthly income stream, qualifying borrowers who have substantial savings or investments but limited documentable income.
What an Asset Depletion Loan Is
An asset depletion loan (also called an asset-based or asset-utilization loan) qualifies you by turning your liquid assets into a monthly income figure. Instead of asking "how much do you earn?", the lender asks "how much could your assets pay out as income over the life of the loan?" It is built for borrowers who are asset-rich but income-light: retirees, business owners between ventures, sellers of a company, and high-net-worth self-employed people whose tax returns understate their financial strength.
How the Calculation Works
The lender totals your eligible liquid assets — typically checking, savings, brokerage accounts, and often a portion of retirement accounts — sometimes after subtracting funds needed for the down payment and reserves. It then divides that total by a fixed number of months to produce a monthly income figure that feeds your debt-to-income ratio. Different programs use different divisors and different haircuts on retirement or volatile assets, so the same balance sheet can produce meaningfully different qualifying income from lender to lender.
A Worked Micro-Example
A founder sold his company and is sitting on $2,000,000 in a brokerage account but has minimal current income. A program that depletes assets over 120 months would count:
$2,000,000 ÷ 120 = $16,667/month of qualifying income.
Another program that uses a more conservative divisor, or that only counts 70% of brokerage holdings, might count closer to $11,667/month. Either way, the borrower who looks unqualifiable on a pay-stub basis becomes very qualifiable — without selling a single share or generating a taxable event.
Why It Matters for the Self-Employed
Asset depletion is the answer to a common self-employed paradox: a strong balance sheet paired with thin, write-off-heavy tax returns. Because it is a non-QM loan, the lender must still confirm your ability to repay, but it can use assets as that proof.
A few practical points:
- The assets generally must be seasoned and verifiable — recent deposits raise questions (see seasoning).
- Retirement accounts are often counted at a reduced percentage, and sometimes only if you're near retirement age.
- You can frequently combine depletion income with other income (1099, bank statement) to push your approval higher.
If your wealth is in accounts rather than on your tax return, asset depletion may unlock a far larger loan than any income-based program — and let your money keep working while you borrow.
Apply This Concept
Related Terms
Non-QM Loan
A mortgage that does not meet the federal Qualified Mortgage (QM) standards — usually because it documents income in a flexible way — yet still must satisfy the lender's ability-to-repay obligation.
Qualifying Income
The income figure a lender actually uses to approve your loan and calculate your debt-to-income ratio — which, for the self-employed, is rarely the same as either your gross revenue or your gross pay.
Reserves
Liquid assets you must have left over after closing — measured in months of mortgage payments — that prove to a lender you can keep paying if income dips.
Debt-to-Income Ratio (DTI)
The percentage of your gross monthly income that goes toward debt payments, including the proposed mortgage — one of the most important numbers in any loan approval.
No-Doc Loan
A loosely used term for low-documentation mortgages that require little or no income verification; today these are non-QM programs (often asset- or DSCR-based) that still satisfy ability-to-repay rules — not the unchecked "stated income" loans of the pre-2008 era.
Related Articles
CPA Letter for a Mortgage: P&L, Expense-Ratio, and How Self-Employed Borrowers Use Them
A "CPA letter" means four different documents in self-employed lending. What each does, when a CPA-prepared P&L replaces tax returns, and how the expense-ratio letter raises bank-statement income.
Asset Depletion Loan: How the Divisor Math Actually Works
An asset depletion loan turns your liquid assets into qualifying income. Here is the divisor math, a full worked example, who it fits, and the requirements.
1099 Income Mortgage: Qualifying as an Independent Contractor
A 1099 income mortgage qualifies independent contractors on 1099 gross minus an expense factor — not Schedule C net. How it works, who qualifies, and how it beats a bank-statement loan.
No Tax Return Mortgage: How to Qualify Without Filing Returns
A no tax return mortgage qualifies you on bank deposits, assets, a P&L, or 1099s instead of your tax-return net. Here are the four programs, what they accept, and the trade-offs.
Master Self-Employed Financing
Get weekly deep-dives on concepts like asset depletion loan, qualifying-income tips, and non-QM loan programs. Free, no spam.