Definition
Asset depletion loans let you qualify by counting your savings and investments as income. If you have $500,000 saved but only $20,000 annual Social Security, lenders divide your assets over 20 years and call that 'income' for qualification. It's perfect for retirees with assets but low current income.
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Asset depletion loans are designed for borrowers with significant assets but limited income (retirees, business sellers, investors living off savings). Lenders allow borrowers to 'count' a portion of liquid assets as income, dividing total assets by a period (typically 10-20 years) to calculate qualifying income. This allows wealthy borrowers with low current income to qualify. Asset depletion loans typically require substantial down payments and have higher interest rates due to non-QM status. This product helps retirees and others with non-traditional income qualify.
Pro Tip
Asset depletion loans help retirees and wealthy borrowers with low income; ensure assets are liquid and documented for lender verification.
Example
A retiree with $500,000 in savings but only $20,000 annual Social Security can qualify using asset depletion, calculating $25,000 annual income ($500,000 ÷ 20 years).