Asset Depletion Loans Explained: Qualifying on Savings and Retirement

Some of the most financially secure people I work with get told they do not qualify for a mortgage. Retirees living off savings, business owners who took a light income year, and people sitting on real investment accounts all run into the same wall: a traditional loan wants to see monthly income on paper, and their money is not shaped that way. Asset depletion is built for exactly this situation.

What Asset Depletion Actually Means

Asset depletion (sometimes called asset-based qualifying) is a method that converts your eligible assets into a monthly income figure for qualifying purposes. Instead of proving income with pay stubs or two years of tax returns, the lender looks at what you have saved and invested, applies a formula, and treats the result as if it were monthly income.

The most important thing to understand up front: this is a qualifying method, not a loan against your accounts. You are not pledging your savings, spending them down, or handing them over. They stay yours. The lender is simply using them as evidence that you can support the payment.

Who This Is Built For

• Retirees with substantial savings and retirement balances but limited monthly income on paper.
• Business owners and self-employed borrowers whose tax returns understate their real financial picture.
• High-net-worth borrowers between ventures, or living off investments rather than a W-2.
• Buyers who recently sold a business or property and are holding significant proceeds.

If your bank and brokerage statements look a lot healthier than your income documents, this is worth a conversation.

How the Calculation Works

The general idea is simple: the lender adds up your eligible assets, applies any required reductions, then divides that net figure by a set number of months to produce a monthly qualifying income. Funds you plan to use for your down payment, closing costs, or reserves are generally subtracted first, so the amount that counts toward the calculation is often lower than your total balances.

The exact divisor and rules depend on the program and the investor behind the loan, so there is no single universal number. As an example, a program using a 180-month divisor would turn $900,000 in net eligible assets into roughly $5,000 per month of qualifying income. A program still using a 240-month divisor would treat the same $900,000 as about $3,750 per month. Same assets, different math, because the guideline sets the divisor.

Because the divisor moves the result so much, it is worth knowing which program you are being qualified under before you assume the answer is no. (Freddie Mac has announced a lower divisor for future loans. I cover the details, including when it takes effect, in this post.)

What Counts as Eligible Assets

Programs vary, but eligible assets commonly include:

• Checking and savings balances.
• Brokerage and investment accounts, often counted at a discounted percentage to account for market risk.
• Retirement accounts such as 401(k) and IRA balances, frequently with additional considerations depending on your age and access to the funds.

Lenders usually apply a haircut to market-based and retirement assets rather than counting them at full face value, and most programs require a minimum amount of net eligible assets to remain after the calculation. Expect underwriting to want recent statements and clear documentation of where large balances came from.

What It Is Not

• It is not a reverse mortgage or a loan secured by your investment accounts.
• It does not require you to liquidate or spend down your savings.
• It is not a workaround for weak credit or an unstable overall file. It is a documentation path for people whose wealth simply does not show up as monthly income.

Trade-offs to Know

Asset-based programs can carry different pricing and down payment expectations than a fully documented conventional loan, and guidelines differ meaningfully from one investor to the next. The upside is real, though: it can open a path to approval for borrowers who are genuinely well positioned but do not fit the standard income box.

Let's See What Your Accounts Actually Support

If you have been told your income does not qualify but your savings and investments tell a very different story, let's look at the asset-based path and see what monthly figure your accounts can actually generate.

Get started here or book a call and we will run the numbers on your specific situation.

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Mike Prenesti, NMLS #1033445. Nexa Lending, LLC, NMLS #1660690. Equal Housing Opportunity. Licensed in Nevada. This article is for educational purposes only and is not a commitment to lend or financial advice. Not all borrowers will qualify. Program guidelines vary by investor and are subject to change.