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Asset depletion is an alternative qualification method for borrowers with substantial assets but limited documentable income. Instead of proving income through bank statements or tax returns, lenders calculate a hypothetical income based on your liquid assets.

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How Asset Depletion Works

Lenders take your eligible assets, subtract funds needed for down payment and closing costs, then divide the remainder over a set period to create monthly qualifying income. Basic formula: (Eligible Assets − Down Payment − Closing Costs) ÷ Months = Monthly Qualifying Income Example: A borrower has $2,000,000 in liquid assets, needs $200,000 for down payment and closing costs, and the lender uses a 360-month (30-year) depletion period. ($2,000,000 − $200,000) ÷ 360 = $5,000/month qualifying income

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Who Uses Asset Depletion

This approach works for:
  • Retirees living off investments
  • High-net-worth individuals with passive income
  • Business owners who take minimal salary
  • Anyone with significant assets but inconsistent or low reported income

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Asset Depletion vs Bank Statement Loans

Some borrowers qualify using both methods—bank statement income plus asset depletion income combined.

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Eligible Assets

Typically eligible:
  • Checking and savings
  • Investment accounts (stocks, bonds, mutual funds)
  • Retirement accounts (often at 60-70% value)
Typically ineligible:
  • Business assets
  • Real estate equity
  • Restricted stock
  • Cryptocurrency (most lenders)

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Common Program Variations

Lenders structure asset depletion differently:
  • Depletion period: 60, 84, 120, or 360 months—shorter periods create higher monthly income but require more assets
  • Asset discount: Some lenders use only 70-80% of investment account values to account for market volatility
  • Minimum assets: Many programs require $500,000 to $1,000,000+ in eligible assets

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Combining with Bank Statement Income

Some lenders allow you to add asset depletion income to bank statement income, maximizing your qualifying amount. This hybrid approach can help borrowers who have both business income and substantial savings.