02 What you need to know
How asset depletion mortgages work
An asset depletion mortgage (also called asset utilization) is a way to qualify for a mortgage using what you own instead of what you earn. The lender takes your eligible assets, adjusts them, and divides the result by a set number of months. That monthly figure is treated as income.
Under certain programs, you may not need any employment income at all. This is common for retirees, people between ventures, and high-net-worth borrowers whose wealth doesn’t show up as a paycheck.
Not every dollar counts the same
Lenders discount assets based on how easily they can be turned into cash. Typical treatment, which varies by lender:
- Cash in checking, savings, or money market: often 100%.
- Stocks, bonds, mutual funds: often 70% to 100%, depending on the lender.
- Retirement accounts (IRA, 401(k)): often discounted, for example to 60% or 70%. If you’re under 59½, the lender may also subtract taxes or early-withdrawal penalties.
- Crypto, restricted stock, business assets: often excluded or limited.
What gets subtracted before dividing
Your down payment, closing costs, and required reserves come off the top. Reserves are savings you must still have after closing, usually measured in months of mortgage payments.
The divisor is lender-specific. Some Non-QM programs divide by 60 to 120 months; others use 360. A shorter divisor produces a much higher monthly figure.
Fannie Mae has a narrow version called “employment-related assets as qualifying income.” It applies mainly to retirement accounts and severance or lump-sum retirement payouts, divides by the loan’s amortization term (360 months on a 30-year loan), and caps the loan-to-value ratio (LTV) at 70%, or 80% if the owner is 62 or older.
03 Real-world example
Example: $3 million in assets, two ways
The simplest version: $3,000,000 in eligible assets divided by 60 months equals $50,000 a month. That ignores discounts and the cash you need to close, so it overstates the result.
A more realistic version applies a discount to each account and subtracts what you need for the purchase.
| Asset | Balance | Counted | Usable |
|---|---|---|---|
| Cash and savings | $1,000,000 | 100% | $1,000,000 |
| Brokerage account | $1,500,000 | 80% | $1,200,000 |
| IRA | $500,000 | 60% | $300,000 |
| Total eligible assets | $3,000,000 | $2,500,000 | |
| Less down payment, closing costs, reserves | −$400,000 | ||
| Net assets for income | $2,100,000 |
Assumptions: hypothetical balances and discount percentages; actual discounts, divisors, and eligible assets are lender-specific. The 60- and 360-month results are shown to illustrate how much the divisor matters, not as a quote from any program.
04 What most people overlook
What borrowers overlook when using assets as income
The same dollar can’t do two jobs. Money used for your down payment or held as reserves generally can’t also be counted toward income. Plan the purchase and the income calculation together.
Ownership and access matter. Assets usually need to be in your name, or in an account you fully control, such as certain trusts. Accounts with withdrawal restrictions or vesting schedules may be excluded.
Seasoning matters. Lenders typically want recent statements, often two to three months, showing the money has been in the account. Large recent deposits may need to be documented.
Other income can be combined. If you receive Social Security, a pension, or rental income, many programs let you add it to the asset figure.
The program that sounds strongest on paper isn’t always the right one. A 360-month divisor at a lower rate may cost less than a 60-month divisor with tougher pricing, if both qualify you.
05 How I’d approach it
How I’d approach an asset-based mortgage
When someone tells me they don’t have income, I ask to see their statements. Plenty of people can qualify on what they’ve already built.
I start with a list of every account: type, balance, whose name it’s in, and whether you can withdraw from it without restrictions.
- I set aside what the purchase needs: down payment, closing costs, and reserves.
- I apply each lender’s discounts to the remaining balances and run the numbers with several divisors.
- I add any steady income you already have, such as Social Security or a pension.
- Then I compare programs on rate, down payment, and total cost, not just on which gives the biggest income number.
For a real example, see how a retired surgeon in Pacific Palisades qualified on assets.