The short version
Asset depletion turns savings and investments into monthly income. The lender discounts your assets, subtracts your closing cash and reserves, then divides the rest by a set number of months.
Dane’s take
Putting more cash down shrinks your income under this loan. A smaller down payment can actually work better.
An asset depletion mortgage (also called asset utilization or asset dissipation) turns savings and investments into monthly qualifying income. It is built for people with a lot of wealth but little taxable income:
- Retirees who live off investments and take small taxable distributions.
- Entrepreneurs who just sold a business and hold the proceeds in cash or investments.
- High net worth borrowers who live on capital gains or other investment returns instead of a salary.
Under the CFPB Ability to Repay rule (12 CFR § 1026.43(c)), lenders may use assets to show you can repay. But a $2,000,000 brokerage statement doesn't approve itself. The lender discounts your assets for market risk, subtracts the cash you need for closing and reserves, and divides what is left over a set number of months.
Agency rules vs. non QM rules
| Feature | Fannie Mae / Freddie Mac | Non QM Asset Depletion |
|---|---|---|
| Divisor | 240 or 360 months | 60, 84, or 120 months |
| Age rules | Some agency options require retirement age | No age requirement |
| Loan size | Conforming limits ($832,750 in most areas in 2026) | Often $3,000,000 or more |
| Use as income | Often added to other income | Can be your only income or blended |
| Buying power | Lower (spread over 20 to 30 years) | Much higher (spread over 5 to 10 years) |
At 360 months, $1,000,000 of eligible assets produces just $2,777 a month in income. At 84 months, the same $1,000,000 produces $11,904 a month, more than four times as much.
What counts and what gets discounted
Cash and cash equivalents (checking, savings, money market, CDs):
Counted at 100% of value.
Stocks, bonds, mutual funds, and ETFs:
Counted at 70% to 80% of market value.
Retirement accounts (401k, IRA, SEP IRA):
Under 59½: counted at about 60% to 70%.
59½ or older: counted at about 70% to 80%.
Usually not counted:
Crypto (unless sold for cash), private company stock, unvested stock units, real estate equity, art and collectibles.
The formula
Step 1: Add your assets after the discounts above.
Step 2: Subtract the down payment, closing costs, and required reserves.
Step 3: Divide what is left by the lender’s divisor (for example 84 months). That is your monthly income.
Worked example: A $750,000 purchase
A retired executive, age 54, with no job income wants to buy a primary home.
- Purchase price: $750,000. Down payment: 20% ($150,000). Loan: $600,000.
- Credit score: 750. Rate: 7.25% fixed for 30 years.
- Monthly payment (PITIA): $5,093 ($4,093 principal and interest plus $1,000 taxes and insurance).
- Lender divisor: 84 months. Required reserves: 6 months of PITIA ($30,558).
- Other monthly debts (car and credit cards): $700.
Step 1: discount the assets
- Checking and savings: $250,000 × 100% = $250,000.
- Brokerage account: $1,000,000 × 75% = $750,000.
- Traditional IRA (under 59½): $800,000 × 60% = $480,000.
- Total after discounts: $1,480,000.
Step 2: subtract the cash for the deal
- Down payment $150,000 + closing costs $15,000 + reserves $30,558 = $195,558.
- Assets left for income: $1,480,000 − $195,558 = $1,284,442.
Step 3: monthly income and DTI
Monthly income = $1,284,442 ÷ 84 = $15,291
DTI = ($5,093 + $700) ÷ $15,291 = 37.9%
At 37.9%, you are under a typical 45% limit and qualifies with no job income.
What if the lender uses a different divisor?
The divisor changes everything. The same borrower, the same assets, and the same loan:
| Divisor | Monthly Income | DTI | Result |
|---|---|---|---|
| 60 months | $21,407 | 27.1% | Qualifies easily |
| 84 months | $15,291 | 37.9% | Qualifies |
| 120 months | $10,704 | 54.1% | Doesn't qualify |
This is why asking the lender for their divisor comes first.
A common mistake: putting more money down
On a regular loan, more down payment lowers your payment. On an asset depletion loan, it also lowers your income.
Every extra $10,000 you put down removes $10,000 from the assets used for income, which cuts your monthly income by about $119 on an 84 month divisor. Sometimes a smaller down payment qualifies better. A lender can run both versions for you.
Credit scores and reserves
| Credit Score | Maximum Loan to Value | Assets Needed | Reserves |
|---|---|---|---|
| 740+ | 80% to 85% | Loan amount plus reserves | 3 to 6 months of PITIA |
| 700 to 739 | 75% to 80% | Loan amount plus reserves | 6 months of PITIA |
| 660 to 699 | 70% to 75% | 1.1 to 1.25 times the loan | 6 to 9 months of PITIA |
| Under 660 | Case by case, up to 65% | 1.5 times the loan | 9 to 12 months of PITIA |
Note: These are typical non QM ranges for 2026. Limits drop for second homes and investment properties. Programs vary by lender.
Planning tips
- Ask for the divisor first: Different lenders use 60, 84, or 120 months. That one number can decide your approval.
- Gather statements: Most lenders want 60 to 90 days of complete statements, including every page.
- Use after tax accounts first if under 59½: Retirement accounts take a bigger discount.
- Protect your reserves: Don’t spend down the cash you'll need after closing.
- Consider blending income: Part time work, a pension, or 1099 income can be added to asset depletion income.
Asset depletion turns a strong balance sheet into mortgage buying power. Matching your assets to the right lender divisor is what makes it work.
Common questions
How much do I need in assets?
It depends on the loan, but often at least the loan amount plus reserves.
Can retirees use asset depletion?
Yes. It's a common choice for retirees.
Which accounts count?
Cash, stocks and retirement accounts, with discounts for stocks and retirement money.