Asset Depletion Mortgage Guide [2025]: Rates, Eligibility & How It Works

What if you could qualify for a mortgage based on your assets, not your income? For many, owning enough in investments to no longer work traditional jobs, and let their money work for them instead, is the dream. 

However, one downside that is not often talked about, even for high-net-worth individuals with assets of $1 million or more, is that this income situation can make it difficult to secure a traditional mortgage. This is where asset depletion mortgages come in.

At Defy Mortgage, our specialty is non-traditional mortgages, with 75+ tailored options for virtually every lending situation. Whether you’re a high-net-worth individual, self-employed professional, entrepreneur, or real estate investor, we can craft a solution that aligns perfectly with your circumstances.

In this guide, we’ll break down how asset depletion mortgages work, who they’re best for, and why they’re a smart option for those in a positive asset position. 

What Is an Asset Depletion Mortgage?

An asset depletion mortgage is a type of loan designed for individuals who have substantial liquid assets but lack a traditional source of income. The total value of the assets, divided by the total months to pay, is essentially considered as the borrower’s monthly income when determining eligibility and terms.

It’s important to note that the borrower is under no obligation to liquidate their assets. They are simply treated as the borrower’s income during underwriting. 

Asset depletion mortgages, also known as asset dissipation mortgages, fall under the category of non-QM (non-qualified mortgage) loans. These types of loans aren’t required to meet the strict requirements set by the Consumer Financial Protection Bureau (CFPB) and are typically much more flexible for individuals who don’t fit the mold of conventional loan requirements. 

Who is this for?

Borrowers with substantial liquid assets but little to no documented income, such as:

1. Retirees who have built a significant nest egg but no longer have a regular paycheck.
2. Self-employed individuals with fluctuating income but considerable savings or investment portfolios.
3. High-net-worth individuals who prefer to rely on their wealth rather than traditional income to qualify for a loan.
4. Heirs or beneficiaries with considerable savings from an inheritance or other sources of liquid assets.

How Does an Asset Depletion Mortgage Work?

Asset depletion loans use liquid assets as qualifying income instead of traditional sources of income. The assets used must be liquid, as in they must be able to be readily sold and converted into cash, unless otherwise stated by a lender.

Note that depending on the lender and asset type, they may not consider 100% of the value of your total assets. This is to allow for any losses in value in the future. 

How Lenders Calculate Usable Assets

The evaluation of your assets depends on the type of asset. Let’s break down how each asset type is counted:

• Cash: Since cash is already liquid, 100% of the value can be directly translated to the hypothetical income when determining eligibility. For money market accounts, the going exchange rate for all moneys at the time of underwriting is typically used.
• Stocks, bonds, and other securities: Up to 80% of the current market value.
• Retirement accounts:  Up to 70% of the funds, provided that the borrower is of the appropriate age to withdraw these funds. If under retirement age, up to 50% may be considered.

It’s important to note that lenders differ in terms of what percentage of each asset they consider as qualifying income. For example, some may be open to using more than 70% of a retirement account.

How to Calculate Loan Affordability

Calculating loan affordability for an asset depletion loan is fairly simple. All you need to do is take the total value of your liquid assets and divide that by the length of the loan term in months. 

For example, let’s say you’d like to use your savings account worth $1,000,000, your retirement fund worth $2,000,000, your money market account containing $1,000,000 in various currencies, and your stock portfolio totaling another $1,000,000. 

Let’s assume you’re under retirement age. This means you can only use 50% of your retirement fund. Unlike your retirement account, the money market account and savings account both contain readily accessible cash, so 100% of their value can be used. However, the lender deemed that only 60% of your stock portfolio’s value will be considered. This leaves you with $3.6 million in liquid assets. 

If you have $3.6 million in liquid assets and you’re looking to get a mortgage with a 30-year term, you would divide that amount by 360 months. This would result in a monthly “income” of $10,000 and would determine your maximum loan amount. 

At Defy, we calculate affordability based on the total value of your liquid assets divided by the total number of months in your loan term. We offer 5-year asset depletion loans, meaning the total qualifying income from your assets can be divided over as few as 60 months.

Eligibility Checklist & Qualification Criteria

Because asset depletion mortgages rely on your assets, they have special requirements. Below, we’ve compiled Defy’s asset depletion loan requirements to serve as your checklist before you apply:

1. Proof of liquid asset ownership.
2. Investment account statements detailing stocks, bonds, mutual funds, and other securities.
3. Retirement account statements (e.g., IRAs or 401(k)s), if applicable and accessible based on age or withdrawal eligibility (typically 59.5 years). 
4. Bank statements for savings and checking accounts to confirm available cash reserves.
5. No tax returns required.
6. Minimum FICO score of 620+.
7. Usually a max DTI of 43% (35% ideal). 
8. Fixed/ARMs.
9. Interest-only options.
10. Up to 80% Max Loan-to-Value (LTV).
11. No maximum loan amount.
12. Only available for primary residences and second homes.

Please note that requirements can vary by lender. Also, keep in mind that exact LTV requirements will depend on specific applicant information, such as credit score, DTI, and other factors, and can be subject to change. 

For more accurate information regarding fees and terms based on your financial profile, you can book a call with us or call (615) 622-1032. 

How to Get an Asset Depletion Mortgage

Getting an asset depletion mortgage generally follows a similar process as applying for other type of mortgage, with the exception of preparing your assets for assessment. Here’s a step-by-step application process:

1. Prepare your asset documentation: Ensure you have significant assets in accounts like savings, investments, or retirement funds that can be used to qualify for the mortgage. Remember that different lenders value assets in different ways, and that more volatile assets like stocks are likely only partially valued.
2. Shop around for a lender: Once you’ve assessed your situation and prepared documentation, the next step is to research and select a specialized lender. Asset depletion loans aren’t widely available, so the best way to quickly find lenders who offer them is to focus on non-QM lenders (like Defy!).
3. Pre-approval and application: After you’ve arrived at a shortlist of a few ideal lenders, it’s advisable to get pre-approved with each of them to find out the preliminary amount and rate they’re willing to offer you. If you’ve found a lender whose pre-approval estimates best fit your needs, you can begin the application process with them.
4. Underwriting and closing: During underwriting, the lender will verify your asset documentation and assess other factors like credit history and debt-to-income ratio. If approved, the lender will provide a loan estimate and closing disclosure detailing the loan terms, interest rate, repayment period, monthly payments, and closing costs. Review these documents carefully. At closing, you’ll sign the final paperwork and pay any required closing costs.

Pros & Cons of Asset Depletion Mortgages

Pros:

• Flexibility: Asset depletion loans accept a variety of liquid assets, including stocks, bonds, and mortgage-backed securities. You can freely choose which assets to commit to the mortgage, whether you want to use all of your assets or use only your bonds, for example.
• Leverage savings and investments: Traditional mortgages’ focus on W-2 income can be a disadvantage for high-net-worth individuals whose income comes from sources other than W-2 income. Asset depletion loans provide an opportunity for you to take full advantage of the savings and investments you’ve built up over the years.
• Keep ownership of assets: You retain full ownership of the assets throughout the life of the loan, allowing you to continue to enjoy the returns from your investments, which can even be used to pay for the loan itself.

Cons:

• Cannot use illiquid assets: Assets that don’t convert easily to cash, such as real estate or other types of property, cannot be used for an asset depletion loan. They can be used with a general asset-based mortgage. We currently do not offer those at Defy.

Asset Depletion vs. Other Loans

	Conventional Loan	Asset-Based Mortgage	Asset Depletion Mortgage
Income verification	W-2s, pay stubs, tax returns.	Assets, including illiquid assets such as real estate. Must be pledged or liquidated.	Liquid assets only, but there is no need to liquidate as long as the borrower can make payments.
Ideal borrower	Individuals with healthy financial profiles and steady income.	Those with various types of assets that they’re willing to part with.	Retirees, self-employed individuals, or high-net-worth borrowers with substantial liquid assets but limited income.
Underwriting criteria	Strict; includes debt-to-income ratios, credit scores, and employment verification.	Flexible, focusing on the value of the assets.	Flexible, focusing on the value of the assets.

Alternatives to an Asset Depletion Mortgage 

If you don’t quite have the liquid assets for an asset depletion loan yet, you also have other options. Here are a few non-QM loans that could be a good fit: 

1. DSCR Loans: A Debt-Service Coverage Ratio loan (DSCR) allows real estate investors to qualify for a mortgage based on the property’s rental income rather than their own.
2. Bank Statement Loans: With a bank statement loan, you can qualify for a mortgage using your bank statements. Lenders will review your deposits to determine affordability. 
3. P&L Loans: A Profit & Loss Statement loan can help you qualify for a mortgage using your business’s CPA-prepared P&L statements. 

Asset Depletion for Refinancing: How It Works

If you want to refinance your home but don’t have a regular W-2 income, asset depletion loans can be a great option, especially if you have a lot of investment income. Instead of using the loan to buy a home, you can use it to pay off your existing mortgage. 

In many cases, refinancing with an asset depletion loan could even be better for your cash flow. As opposed to an asset-based mortgage, where you have to sell your assets to qualify, asset depletion loans assume a hypothetical income based on the value of your assets. This means your money can continue to grow in your accounts while still helping you qualify.

This means that your liquid assets stay in your hands, continuing to earn returns while you pay off the mortgage. You also avoid the hefty tax liability of selling your assets.

Asset Depletion Mortgages: FAQs

Can I refinance using asset depletion income?

Yes, asset depletion loans can be a great option for refinancing if you have sufficient assets but not enough W-2 income to qualify for a traditional refinance. 

What’s the minimum/maximum DTI allowed?

Since asset depletion loans are non-QM, lenders can have varying DTI requirements for their offerings, but in general, lenders typically favor those whose DTI is lower than 43%, with 35% being ideal. 

Can I use trust or business assets?

As long as these assets are liquid (i.e., can easily be sold and converted to cash) and are 100% owned by you, they can be used for an asset depletion loan. 

Are there age restrictions for retirement account assets?

Yes. Most lenders let you use more of your retirement account if you’re at or near retirement age. Typically, those already receiving their pension (or those above 59 years and 6 months of age) can use up to 70% (some lenders even go up to 100%) of their retirement account assets for an asset depletion loan, while those under can only use up to 50%. 

Can I get an asset depletion loan for an investment property?

Unfortunately, asset depletion loans are only for primary and secondary residences. If you wish to finance an investment property, consider a DSCR loan which can offer highly competitive terms if your property can make several times its annual debt obligation per year.

What’s the difference between asset depletion and asset-based lending?

Both types of mortgages are based on the market value of the assets. However, with asset-based lending, borrowers typically have to transfer ownership of the asset to their lender to secure the mortgage. 

With asset depletion, you keep full control of your assets. The lender just pretends your assets are income to see if you can afford the loan. 

How do asset depletion mortgage rates compare to conventional rates?

As a non-QM mortgage, asset depletion mortgage rates can be higher than those of conventional mortgages. Typically, you can expect their interest rates to be 0.5 to 2% above conventional loan rates, depending on the value of your assets and your financial profile. Consult your lender to determine the rates available to you.

What happens if my asset values change after approval?

Because investment value can go up or down, lenders only account for up to 70-80% of the value depending on the asset’s volatility. Some lenders may periodically reevaluate your asset value during the lifetime of the loan. Changes in asset value can affect your ability to refinance the loan.

Do your assets need to be liquid to get an asset depletion mortgage?

Only liquid assets, or those that can quickly be turned into cash without losing much value, are eligible. This includes assets such as cash, stocks, bonds, mutual funds, and similar investments. However, it’s important to note that you do not need to liquidate these assets to qualify. 

Illiquid assets, such as real estate or business ownership, don’t count for asset depletion mortgages because they’re harder to access quickly.

Do I need to sell my assets to get an asset depletion mortgage?

No! You don’t need to sell your assets such as stocks, bonds, or mutual funds to get an asset depletion mortgage. Lenders will use the value of your liquid assets to determine your affordability. 

However, if you want to use illiquid assets like real estate, you’d first need to sell or refinance them to convert that value into liquid form.

Do asset depletion mortgages require tax returns to qualify?

No, tax returns aren’t required to qualify for an asset depletion mortgage. Instead of verifying your income through tax documents, lenders calculate your affordability based on the value of your liquid assets.

Key Takeaways

If you’re having difficulty securing a mortgage with traditional income, asset depletion mortgages allow you to leverage your liquid assets instead. Plus, since you won’t have to sell your assets to close on the loan, they stay in your possession and continue to generate returns. 

While asset depletion mortgages provide an alternative path to obtaining a home loan, they require thorough documentation and a comprehensive assessment of your asset position. Each lender also has different requirements, so make sure to evaluate their eligibility criteria carefully.

Still undecided if asset depletion mortgages are the right fit for you? Schedule an appointment with a Mortgage Consultant at Defy, or give us a ring at (615) 622-1032. We’ll chat about your financial strategy and find an option that aligns with your goals and objectives, whether it’s an asset depletion loan, bank statement loan, or a DSCR loan.