Asset depletion loans: qualify using your savings and investments

Asset depletion qualification at a glance

Minimum credit score

Typically 620 to 680, depending on the lender

Down payment

Larger down payment typically required

Eligible asset types

Checking, savings, investment accounts, retirement accounts (usually discounted)

Income calculation

Net documented assets, after the down payment, closing costs, reserves and applicable discounts, divided by a lender-specific divisor (commonly tied to the loan term, but this varies by lender and program)

Employment

Not required

Property types

Single-family residence, condo, second home

The figures above are general market guidelines, not a commitment from Wonder Rates. Requirements vary by lender.

Why asset depletion loans exist

Conventional mortgages rely heavily on employment income, W-2s and tax returns. That works well for borrowers with traditional careers, but it doesn’t always reflect the financial strength of someone who has accumulated significant savings or investments.

An asset depletion loan was created for borrowers whose wealth may be substantial even if their monthly employment income is limited or nonexistent. Instead of focusing solely on a paycheck, lenders evaluate whether the assets left after your transaction costs could reasonably support the mortgage over time. That makes it especially relevant for retirees, investors and anyone whose financial life looks different from the typical salaried borrower.

How lenders calculate asset-based income

This is one of the most commonly misunderstood parts of the program. Lenders do not simply take your full asset balance and divide it by the loan term; the calculation works off a smaller, net figure. Each lender has its own methodology, but the general concept follows these steps:

1. 1

   Identify your total eligible liquid assets across qualifying accounts.

2. 2

   Apply any required discounts, most often to retirement accounts and sometimes to actively traded investments. In practice the lender counts only a portion of the balance, to account for taxes, potential penalties or market volatility. There is no single published industry standard for this percentage, so it is one of the most important details to confirm with your lender.

3. 3

   Subtract the funds needed for your down payment and closing costs, since those dollars are being spent on the transaction.

4. 4

   Subtract any cash reserves the loan program requires.

5. 5

   Divide the remaining net documented assets by the applicable divisor. This is commonly tied to the loan term, but some lenders use a different period or formula, so confirm it with the specific lender.

The result, based on what is left after those deductions rather than your full account balance, becomes the qualifying income used in underwriting. Because the structure hinges on what you own, net of transaction costs, rather than what you earn, this is often called an asset-based mortgage.

How it works with Wonder Rates

1. 1

   Submit your asset statements

   Provide statements from checking, savings, brokerage and retirement accounts for the past few months. Lenders typically want two to three months of history to confirm the funds are genuinely yours and not a last-minute deposit.

2. 2

   Wonder Rates calculates your qualifying income

   We apply the appropriate discounts, subtract the funds earmarked for the transaction and required reserves, then apply the program’s divisor to arrive at a monthly qualifying income figure.

3. 3

   Compare the right program for you

   Based on your assets and goals, we compare asset depletion against other non-QM programs. If a bank statement loan or a blended approach would serve you better, that gets weighed too.

4. 4

   Complete your file and underwriting

   You don’t need to supply employment documentation. The focus shifts to verifying the source and stability of your assets, along with credit history, the property and your funds to close.

Who an asset depletion loan is for

Pros and cons

Why borrowers choose asset depletion

Many borrowers qualify for more than one type of mortgage; someone with substantial assets may also be eligible for a bank statement loan or another non-QM option. Borrowers often choose asset depletion because it lets them qualify without relying on employment income, while keeping the bulk of their investments intact. Rather than liquidating assets to create income, they document what they already own, minus what’s earmarked for the transaction. Working with a broker like Wonder Rates makes it easier to compare those options before you decide.

Asset depletion vs. bank statement loan

Both may be offered as non-QM loans and don’t require W-2 income, but they calculate income differently. A bank statement loan bases income on the cash moving through a business or personal account over the past 12 or 24 months, which suits self-employed borrowers with steady revenue. An asset depletion loan bases income on the assets left after your down payment, closing costs and required reserves are set aside, which fits borrowers with large savings or investments but little steady monthly cash flow, such as a retiree drawing down a portfolio.

The two programs aren’t mutually exclusive. If you have both consistent business income and significant assets, Wonder Rates can compare each option, or in some cases blend elements of both, to see which structure may work best.

Documents you’ll typically need

Although employment documentation is generally not required, asset depletion loan requirements still call for verifying your financial position. You may be asked to provide:

• Recent checking and savings statements
• Brokerage account statements
• Retirement account statements
• Government-issued identification
• Purchase contract, if applicable
• Documentation for large deposits or unusual transactions

Additional documentation may be requested depending on the lender and your profile. Every lender evaluates assets a little differently, which is why comparing multiple wholesale lenders helps.