Asset Depletion Loan

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.