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Asset depletion converts a lump sum of assets into a monthly qualifying income figure. The calculation is straightforward, but lenders vary significantly in the depletion period they use, which directly affects how much monthly income you qualify with.

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The Standard Formula

(Eligible Assets − Down Payment − Closing Costs) ÷ Depletion Period = Monthly Qualifying Income Example:
ItemAmount
Eligible assets$2,000,000
Down payment$150,000
Closing costs$20,000
Net eligible assets$1,830,000
Depletion period360 months
Monthly qualifying income$5,083

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Depletion Period Variations

The depletion period is the denominator—the number of months the lender divides your assets by. It has a major impact on qualifying income:
Depletion PeriodMonthly Income on $1,000,000
60 months$16,667
84 months$11,905
120 months$8,333
240 months$4,167
360 months$2,778
A lender using a 60-month depletion period will qualify you for roughly six times more monthly income than one using 360 months—on the same asset base. Why lenders choose different periods:
  • 360 months mirrors the 30-year loan term (conservative—assumes assets deplete over the life of the loan)
  • Shorter periods assume faster asset drawdown (more aggressive, more favorable to the borrower)
  • Some lenders peg the depletion period to the borrower’s remaining life expectancy

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Asset Discounting

Lenders don’t always count 100% of your eligible assets. Common discounts:
  • Investment accounts: 70-80% of current value
  • Retirement accounts: 60-70% of current value
Effect of discounting on a $1,500,000 portfolio (50% stocks, 50% retirement):
Asset TypeBalanceDiscountEligible
Investment account$750,00020%$600,000
Retirement account$750,00030%$525,000
Total eligible$1,125,000
The $375,000 difference from discounting means meaningfully less qualifying income.

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Combining Asset Depletion with Other Income

Many lenders allow asset depletion income to be added to other qualifying income sources:
  • Asset depletion + bank statement income — Strong hybrid for business owners with both cash flow and savings
  • Asset depletion + rental income — Useful for borrowers with investment property income
  • Asset depletion + Social Security or pension — Common for retirees with supplemental savings
Adding sources increases total qualifying income and can help bridge gaps when one method alone falls short.

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Shopping for the Best Depletion Terms

Because depletion period varies significantly by lender, comparing programs is essential:
  • Ask each lender their standard depletion period
  • Ask whether shorter periods are available for larger asset bases
  • Ask how they discount investment and retirement accounts
  • Calculate your qualifying income under each lender’s methodology before choosing
A lender offering a 120-month depletion period will produce three times the monthly income of one using 360 months—a difference that can determine whether you qualify at all.