Documentation Index
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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.
(Eligible Assets − Down Payment − Closing Costs) ÷ Depletion Period = Monthly Qualifying Income
Example:
| Item | Amount |
|---|
| Eligible assets | $2,000,000 |
| Down payment | $150,000 |
| Closing costs | $20,000 |
| Net eligible assets | $1,830,000 |
| Depletion period | 360 months |
| Monthly qualifying income | $5,083 |
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 Period | Monthly 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 |
- 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
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 Type | Balance | Discount | Eligible |
|---|
| Investment account | $750,000 | 20% | $600,000 |
| Retirement account | $750,000 | 30% | $525,000 |
| Total eligible | | | $1,125,000 |
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.
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.
