Asset Depletion Loans: Guide for Retirees and High-Asset Borrowers

Retirees and high-net-worth individuals often face an ironic challenge: despite substantial assets, qualifying for a traditional mortgage can be difficult without consistent income. Asset depletion loans provide a solution by allowing borrowers to leverage their assets—rather than earned income—to qualify. This guide breaks down everything you need to know about this unique financing option.

What is an Asset Depletion Loan?

An asset depletion loan (also called an asset-based loan) is a type of mortgage where a borrower’s assets are used to determine loan eligibility instead of—or in addition to—traditional income. Rather than providing proof of salary or self-employment income, borrowers use savings, investments, or retirement funds as qualifying income.

Lenders “deplete” or draw down a portion of the asset value using a specific formula to calculate monthly income.

Who Should Consider an Asset Depletion Loan?

Asset depletion loans are ideal for:

• Retirees who have left the workforce but have significant investment or retirement savings.
  
• High-net-worth individuals with liquid assets but irregular income streams.
  
• Self-employed professionals with seasonal or inconsistent income but strong balance sheets.
  
• Real estate investors relying on equity or capital gains.
  

These loans enable qualified borrowers to leverage financial strength rather than prove income through W-2s or tax returns.

How Lenders Calculate Asset-Based Income

Lenders use formulas that vary depending on asset type and risk. Typical calculations include:

• Liquid assets (cash, savings): Divided by 60–120 months to estimate monthly income.
  
• Retirement accounts (IRA, 401(k)): May only be considered if borrower is 59½ or older; divided by 240 months.
  
• Investment accounts (stocks, bonds): Typically discounted by 30% to account for market volatility, then divided over 60–120 months.
  

For example:
If you have $1.2 million in liquid assets, and a lender uses a 120-month depletion model, that equals $10,000 per month in qualifying income.

Looking for a personalized loan strategy? Speak to our mortgage specialists to evaluate your eligibility for asset depletion lending.

Eligible Assets for Depletion Loans

Lenders typically consider the following asset classes:

• Checking and savings accounts
  
• CDs and money market accounts
  
• Stocks, bonds, mutual funds
  
• IRAs, 401(k)s, and pensions
  
• Trust accounts
  
• Annuities (under specific conditions)
  

Note: Real estate equity and non-liquid assets are generally not eligible unless converted.

Pros and Cons of Asset Depletion Loans

Pros

• No employment requirement – ideal for retirees.
  
• Flexible income qualification – uses assets instead of job-based income.
  
• Multiple property types eligible – primary residences, second homes, and investment properties.
  
• High loan amounts available – suitable for luxury or jumbo loans.
  

Cons

• Higher interest rates – risk-based pricing often applies.
  
• Strict asset documentation – extensive verification is required.
  
• Not all lenders offer them – these are niche products.
  
• Some assets are discounted – reducing qualifying income.
  

Not sure if you qualify? Request a mortgage pre-approval review based on your current asset portfolio.

Loan Requirements and Qualification

While every lender differs, here are common requirements:

Who Offers Asset Depletion Loans?

Not all lenders offer asset depletion loans. These are typically found at:

• Mortgage brokers with specialty loan programs
  
• Private banks and lenders
  
• Non-QM (Non-Qualified Mortgage) lenders
  

Tip: Work with a mortgage advisor who understands the nuances of asset-based underwriting.

Common Scenarios for Using Asset Depletion Loans

1. Retired couple with a $2M portfolio but no employment income
   
2. Investor living off dividends and capital gains
   
3. Entrepreneur in between ventures with substantial liquid savings
   
4. Trust beneficiary with access to disbursements but no salary
   

FAQs: Asset Depletion Loans

Read Next

If you found this guide helpful, here are more resources to explore:

• Top DSCR Loan Programs in 2025: Rates, Terms & Lender Comparisons
• DSCR Loan Requirements by State: What You Need to Qualify in All 50 States
  

For personalized advice, asset analysis, or application assistance, connect with one of our specialists today. Let’s make your assets work for you.