> ## Documentation Index
> Fetch the complete documentation index at: https://cameron.mintlify.site/llms.txt
> Use this file to discover all available pages before exploring further.

# Asset Depletion Calculation Methods

> How lenders calculate qualifying income from assets, including depletion period variations and hybrid approaches

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.

## The Standard Formula

**(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                       |

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

## 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** |

The \$375,000 difference from discounting means meaningfully less qualifying income.

## 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.

## 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.