An asset depletion loan qualifies you on your savings, investments, and retirement accounts instead of a paycheck. The lender divides your eligible liquid assets across a set number of months to create a qualifying income figure. You never withdraw or spend the money. Retirees, high-net-worth buyers, and business owners with write-offs use this program to buy in Houston when tax returns do not show enough income.
Most mortgages start with one question: how much do you earn each month? For a salaried employee, that answer is simple. For a retiree living off a portfolio, a business owner who writes income down on tax returns, or a high-net-worth buyer whose wealth sits in brokerage accounts, the paycheck question misses the point entirely. You may hold seven figures in the bank and still get declined because the income line on your return looks thin.
Asset depletion loans fix that mismatch. Instead of asking what you earn, the lender asks what you have. Your liquid assets become the basis for qualification. Asset depletion is one of several non-QM loan options that look past traditional income documentation. If your income is variable rather than absent, a bank statement loan may fit better.
What This Means for Houston Buyers
You can buy a home using the strength of your balance sheet, not your tax returns.
Your assets stay invested and untouched. The calculation is math on paper, not a withdrawal.
Retirees and asset-rich borrowers get a clean path to approval without a co-signer or a forced portfolio sale.
What Is an Asset Depletion Loan?
An asset depletion loan, also called an asset qualifier or asset-based mortgage, converts your liquid assets into a monthly qualifying income. The lender takes your eligible account balances, applies a discount to anything that carries market risk, and spreads the total across a fixed number of months. That produces a dollar figure the underwriter treats exactly like salary when calculating your debt-to-income ratio.
The word depletion describes the math, not your accounts. Nothing is depleted in real life. Your money stays where it is, keeps earning, and remains yours. The lender only needs to see that the balances are real and that they stay verifiable through closing.
How Asset Depletion Income Is Calculated
The formula is straightforward. Add up your eligible liquid assets, discount the accounts that carry risk, then divide by the program's amortization window. The number of months varies by lender and by asset type, but 60, 120, and 360 months are the common windows.
Asset Depletion Formula
Eligible Assets = discounted total of cash, investment, and retirement balances
A Worked Example
Say you are a recent retiree buying a home in Sugar Land. You hold $300,000 in savings and money market accounts and $1,100,000 in a brokerage account. The lender counts your cash near full value, so the $300,000 stands. It discounts the invested $1,100,000 to roughly 70 percent to allow for market swings, which brings that account to $770,000. Your down payment and closing costs come out first, since those funds are being spent rather than held, but for this example your eligible total after the discount lands near $1,200,000.
Divide that $1,200,000 by a 120-month window and you get $10,000 of qualifying income per month. The underwriter now runs your debt-to-income ratio using $10,000 as if it were a paycheck, even though you never touch a dollar of the portfolio. A shorter window, such as 60 months, produces a higher monthly figure but requires the lender to offer that term. A longer 360-month window produces a lower figure but stretches modest balances further. The right window depends on the program and your asset mix.
Cash Versus Invested Assets
Not every dollar counts the same. Lenders separate stable cash from assets that move with the market or carry penalties for early access.
| Asset Type | Typical Counted Value | Why |
|---|---|---|
| Cash, checking, savings | 100% | No market risk, immediately available |
| Brokerage, stocks, mutual funds | ~70% | Discounted for market volatility |
| Retirement (401k, IRA) | 60-70% | Discounted more if under retirement age |
Who Fits an Asset Depletion Loan?
Retirees
Living off savings and investments with limited monthly income on paper
High-Net-Worth Buyers
Large portfolios but modest reported income after deductions
Complex-Income Borrowers
Business owners and investors whose tax returns understate cash flow
The common thread is a strong balance sheet paired with income that does not qualify you conventionally. If you sold a business, live off a trust, draw down a retirement account, or simply keep your wealth invested, asset depletion lets that wealth do the qualifying. Self-employed buyers who still show some income may also compare this with a self-employed mortgage to see which path produces the stronger file.
Eligible Assets
Lenders count liquid assets you can access and verify. The exact list varies by program, but these are the standard categories.
🏦 Cash Accounts
- Checking and savings
- Money market accounts
- Certificates of deposit
📈 Investment Accounts
- Brokerage accounts
- Stocks, bonds, and ETFs
- Mutual funds
🪙 Retirement Accounts
- 401(k) and 403(b)
- Traditional and Roth IRA
- Vested pension balances
🚫 Usually Excluded
- Home equity in other property
- Business operating accounts
- The down payment funds themselves
General Requirements
Most programs want your assets seasoned, meaning the balances have been in your accounts for 60 to 90 days rather than deposited days before you apply. Lenders also verify that the funds are yours and not borrowed. Requirements shift with credit, property type, and whether the home is a primary residence, second home, or investment property.
What You Do NOT Need
- Pay stubs or a current employer
- A minimum monthly income figure
- To sell or withdraw any of your assets
- Traditional debt-to-income built on wages
Can You Combine Asset Depletion With Income?
Yes. Blending is common and often the strongest approach. If you draw Social Security, a pension, rental income, or part-time wages, the lender adds those documented streams to your calculated asset income. A retiree with $4,000 a month in Social Security and pension plus $6,000 in calculated asset income qualifies on a combined $10,000. This flexibility helps borrowers who have decent assets and some income but not enough of either alone.
Asset Depletion vs Conventional
| Feature | Conventional | Asset Depletion |
|---|---|---|
| Qualifies On | Monthly income from work | Liquid assets |
| Income Documentation | Pay stubs, W-2s, tax returns | Asset statements |
| Best For | Salaried W-2 employees | Retirees and asset-rich buyers |
| Must Withdraw Assets | N/A | No |
| Down Payment | 3-20% | 20-30% |
| Interest Rate | Lower | Modestly higher |
How to Get Started
- Tell me about your accounts and the home price you have in mind
- I run the asset depletion math to show your qualifying income
- Get pre-approved so you can make offers with confidence
- Close without ever touching your portfolio
I work with buyers across Houston in both English and Vietnamese, so the numbers are clear from the first conversation.
Frequently Asked Questions
What is an asset depletion loan?
An asset depletion loan is a mortgage that qualifies you on your liquid assets instead of your monthly income. The lender takes your eligible savings, investment, and retirement balances and divides them across a set number of months to create a qualifying income figure. You are not required to withdraw or spend the money. It stays in your accounts. Retirees, high-net-worth borrowers, and people with complex income use this program when tax returns and pay stubs do not tell the full story.
How is asset depletion income calculated in Houston?
The lender adds up your eligible liquid assets, applies a discount to accounts that carry market risk or early withdrawal penalties, then divides the total by the program's amortization window, commonly 60, 120, or 360 months. For example, $1,200,000 in eligible assets divided by a 120-month window produces $10,000 per month of qualifying income. That figure is used in the debt-to-income calculation exactly like a paycheck would be. The number of months used varies by lender and by whether the assets are cash or invested.
Do I have to liquidate my assets to use an asset depletion loan?
No. This is the most common misunderstanding. The asset depletion calculation is only a math formula the lender uses to prove you have the financial capacity to repay the loan. You do not sell, withdraw, or pledge any of the funds. Your investments keep growing and your retirement accounts stay untouched. The assets simply need to remain verifiable in your accounts through closing.
Who qualifies for an asset depletion mortgage?
Asset depletion loans fit retirees living off savings, high-net-worth borrowers with large portfolios and modest reported income, business owners who write income down on tax returns, and anyone whose wealth sits in accounts rather than a steady paycheck. If you have significant liquid assets but your tax returns or pay stubs do not show enough income to qualify conventionally, this program is built for your situation.
What assets count toward an asset depletion loan?
Eligible assets typically include checking and savings, money market accounts, certificates of deposit, brokerage and investment accounts holding stocks, bonds, and mutual funds, and retirement accounts such as 401(k) and IRA balances. Cash accounts are usually counted at or near full value. Investment accounts are discounted, often to about 70 percent, to account for market movement. Retirement accounts may be discounted further if you are under retirement age. Home equity, business assets, and the down payment funds themselves generally do not count.
Can I combine asset depletion with other income?
Yes. Many borrowers blend asset depletion income with Social Security, pension, rental, or part-time employment income to strengthen the file. The lender adds the calculated asset income to your documented income streams to reach a combined qualifying figure. This flexibility helps borrowers who have solid assets and some income but not enough of either one on its own to qualify.
Is an asset depletion loan more expensive than a conventional mortgage?
Asset depletion loans are non-QM products, so pricing usually runs modestly higher than a standard conventional loan and down payment expectations tend to be larger, often 20 to 30 percent. In exchange you get a path to homeownership that ignores the income documentation hurdles that block many asset-rich borrowers. Actual pricing depends on your credit, down payment, property type, and the strength of your asset profile.
Can retirees in Houston use an asset depletion loan?
Yes, and retirees are one of the most common users of the program. After leaving the workforce, many retirees have limited monthly income on paper but hold substantial savings, brokerage balances, and retirement accounts. Asset depletion converts those balances into qualifying income so a retiree can buy a home, downsize, or relocate to Houston without drawing down the portfolio or taking on a co-signer.
Related Programs
- Non-QM Loans Houston - Compare every alternative documentation program
- Bank Statement Loans - Qualify on deposits when you have variable income
- Self-Employed Mortgage - Options for business owners and 1099 earners
- 1099 Mortgage Houston - Qualify on your 1099s instead of full tax returns
- DSCR Loans - Investment property financing based on rental income
- Investment Property Loans - All financing options for Houston investors
See What Your Assets Can Qualify You For
Send me your account balances and target price. I will run the asset depletion math and show you the qualifying income. Takes minutes.
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