Asset depletion loan — definition & guide

A mortgage program that uses a borrower's liquid assets as a proxy for income. Typically divides the asset balance by a number of months (often 84 or 120) to derive a qualifying monthly income figure.

Asset depletion underwriting translates a pool of liquid assets into an imputed monthly income for mortgage qualification. The lender totals eligible assets, such as brokerage balances, retirement accounts at 70% of value, and savings, then divides by a fixed number of months specified by the program, typically 84 months (seven years) or 120 months (ten years). The resulting figure replaces or supplements documented wage income in the DTI calculation. This serves recent retirees, post-exit founders, and RSU-rich employees whose W-2 income understates their actual capacity to pay.

Example: a tech employee post-acquisition has $3.2 million of liquid assets and $180,000 of documented W-2 income. Under an 84-month asset depletion formula, the $3.2 million generates $38,095 of monthly qualifying income, on top of $15,000 from wages. The combined $53,095 monthly income supports a significantly larger loan amount.

Common mistake: assuming all assets count. Retirement account balances are typically discounted 30% for early-withdrawal penalty, and the 59 1/2 age rule affects eligibility at some lenders.

Asset depletion matters at post-IPO home purchases, at early retirement mortgage applications, and at second-home financing with concentrated assets.