Asset Depletion Mortgages: Using Your Assets Versus Income Docs

Asset-Depletion Mortgages are different from lender to lender depending on the lender. Asset-Depletion Mortgages are non-conforming loans. Portfolio lenders normally offer asset depletion loans. Lending guidelines on Asset-Depletion Mortgages are not uniform. It varies from lender to lender. Capital Lending Network, Inc. (CLN) offers various types of Asset-Depletion Mortgages. Borrowers assets are used versus income docs. There are no income tax returns required. Asset-depletion mortgages are ideal for high net worth retirees and/or self-employed homebuyers.

What Are Asset-Depletion Mortgages

For borrowers with substantial assets and very little wages, an asset depletion mortgage loan program may be the best. It is a non-traditional form of financing. Lenders use borrowers’ assets as an income tool. It is often called asset-based mortgages. Others refer to them as asset dissipation mortgage loans. Other investors may refer to them as high assets and no income verification loans. Regardless, it is the same loan program and has the same meaning. Borrowers do not need a job or provide lenders with income tax returns.

How Asset Depletion Mortgages Work

Borrowers with substantial assets but little to no income can use their assets for lenders to use as income. Capital Lending Network, Inc. has multiple asset depletion loan programs. Lending requirements on Asset Depletion Mortgages vary depending on the loan program. In general, the way mortgage underwriters qualify income is by taking borrowers’ total assets and dividing them by 60 months. Underwriters use 100% of the assets that are considered liquid assets.

How Is Income Calculated On Asset-Depletion Mortgages

Qualified income is calculated by taking the total liquid assets and dividing them by 60 months. 90% of the assets in a borrowers retirement account is used as liquid assets. Monthly qualified income is taking the total liquid assets and dividing them by 60 months. The above is the simple formula used in calculating monthly hypothetical income when calculating debt-to-income ratios.

Case Scenario On How Underwriters Calculate Income On Asset-Depletion Mortgages

How Underwriters Calculate Income On Asset-Depletion Mortgages

Best way to explain how underwriters calculate income on asset depletion loans is using a case scenario:

  • Say borrower has $500,000 in their bank account
  • They also have $400,000 in their retirement account
  • They also have $200,000 in their stock and securities account

Here is how it works:

  • $500,000 x 100% = $500,000
  • $400,000 x 90% = $360,000
  • $200,000 x 90% = $180,000
  • Total eligible amount = $1,040,000

The total amount of qualifying assets of borrowers is $1,040,000. Underwriters will then divide the $1,040,000 by 60 months. The borrower’s monthly income will be $17,666.70. This figure will be used as a monthly income when calculating debt to income ratio.

Case Scenario Of Asset-Depletion Mortgages
Case Scenario Of Asset-Depletion Mortgages

Another case scenario of asset depletion mortgages income qualification:

Borrowers have $1,000,000 in liquid cash in their bank account. $600,000 in their IRA pension account. $200,000 in their pension account. $150,000 in their stock and bond account. This one particular investor will use 70% of retirement accounts versus 90%. It is up to the individual investor on the percentage of the retirement account they allow to be used as liquid assets:

Here is how it works:

  • $1,000,000 x 100% = $1,000,000
  • $600,000 x 70% = $420,000
  • $200,000 x 70% = $140,000
  • $150,,000 x 70% = $105,00
  • Total eligible amount = $1,665,000

The total assets that this borrower can qualify for is $1,665,000. Take this figure and divide it by 60 months. The yielding figure of  $27,750 would be the maximum amount of monthly payment the borrower will qualify for on the asset depletion mortgages.

Types Of Assets That Can Be Used

The following assets can be used:

  • bank accounts (checking or savings), money market accounts
  • CD (certificate of deposit)
  • investment accounts (such as stocks, bonds, and mutual funds)
  • retirement accounts (such as a 401k or IRA)

Borrowers Asset Depletion Mortgage Guidelines And Requirements

The higher the credit scores, the more solid a borrower is. We can approve borrowers with credit scores down to 500 FICO.

The higher the credit scores, the more solid a borrower is. We can approve borrowers with credit scores down to 500 FICO. Every borrower’s file is unique and different. We can make an exception on a case-by-case basis. There are no wage requirements. Borrowers under 50 years old may be able to use retirement assets as qualified assets. Asset depletion programs are eligible for owner-occupant, second, and investment homes. There are no maximum loan limits Ownership can be held under trust, LLC, and/or corporation.

What Down Payment Requirements on Asset Depletion Mortgages

A 25% down payment is normally required. Single-family homes, condos, non-warrantable condos, condotels, and 2 to 4 unit properties are eligible. Borrowers need 110% of the loan amount in assets. For example, if the borrower is has a new $500,000 asset depletion mortgage loan, the borrower needs to have at least 110% of the $500,000 or $550,000 in assets Asset Depletion Loans are becoming more and more popular. This holds true for retired home buyers with plenty of assets but little to no income. The team at Capital Lending Network, Inc. are experts in alternative financing such as asset depletion and non-QM loans. We are also experts in bank statements loans for self-employed borrowers.


Peter has 7+ years of experience in residential lending. He is a licensed Realtor in the Chicagoland area.