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Not all qualified home buyers are salaried employees with a steady income and regular paycheck. Many high-net-worth individuals — like business owners, retirees, or those living off dividends — have substantial assets but no regular income. For these types of borrowers, qualifying for a mortgage the conventional way might not work.
Fortunately, other loan types, like asset depletion loans, offer an alternative path to homeownership for borrowers who might not meet conventional income criteria but have valuable liquid assets.
This article will walk you through what asset depletion loans are, how they work, and who they’re most suitable for.
An asset depletion loan is a type of non-qualified (non-QM) loan that lets borrowers qualify for a mortgage based on assets instead of traditional documents, like W-2s or tax returns.
Instead of calculating a debt-to-income (DTI) ratio based on an employment salary, lenders “deplete” the borrower’s assets over a specific period to determine a qualifying income.
Asset depletion loans are designed for borrowers with substantial financial assets but limited or no traditional income, such as the following:
Asset depletion loans are helpful for several reasons:
Only certain assets may be considered for asset depletion loan calculation, while others are ineligible:
Eligible Assets | Ineligible Assets |
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Note: Some assets may be 100% eligible, while others are partially eligible; Retirement accounts may be subject to age-based adjustments.
Borrowers may qualify for an asset depletion loan in the following ways:
While lending criteria may vary, standard requirements for an asset depletion loan include the following:
Credit Score | Minimum 620 FICO required. |
Down Payment | Typically 15% – 25% required, depending on credit and property type. |
Debt-to-Income DTI Ratio | No DTI is required with sufficient assets. |
Asset Holding | Assets must be held in an account for at least 60 days. |
Asset Verification | Full paper trail including bank/brokerage statements. |
As is the case with any loan product, asset depletion loans come with both perks and drawbacks.
There are key differences between asset depletion loans and traditional mortgages:
Asset Depletion Loans | Traditional Mortgages | |
Income Verification | Based on asset value | Based on W-2s and tax returns |
Interest Rates | Slightly higher than conventional mortgages | Lower rates for borrowers with strong credit and finances |
DTI Limits | None | Typically capped at 45-50% |
Best For | Asset-heavy borrowers with little to no traditional income | Employed or self-employed workers with verifiable income |
No, asset depletion loans don’t require asset liquidation. Lenders use the balance of assets to calculate qualifying income. This can help avoid negative tax implications that come from liquidating assets.
Yes, other income sources, like 1099s or Social Security, may be combined with income from your assets to qualify for an asset depletion loan.
You can use an asset depletion loan to finance primary residences, second homes, and investment properties, including condos, townhomes, and single-family homes. Properties can be located anywhere, including in Seattle, Portland, Los Angeles, Boise, Denver, or elsewhere in the Pacific Northwest and beyond.
Is there a minimum in asset value needed to qualify?
There’s no set minimum, though you’ll need enough assets to cover the lender’s asset depletion calculation.
Asset depletion mortgages are ideal for high-net-worth borrowers, retirees, self-employed individuals, business owners, or anyone with substantial assets but limited or irregular income.
Generally, yes, interest rates tend to be slightly higher than conventional loans because of the non-traditional underwriting involved.
Asset depletion loans are available from mortgage companies, like Sammamish Mortgage, with experience in these loan programs.
Asset-heavy individuals may find asset depletion loans more suitable than traditional mortgages, particularly with little to no income for lenders to verify. These loans give you more flexibility when traditional loan options fall short. But like all non-traditional loans, asset depletion loans require careful planning. Be sure to work with a seasoned mortgage lender who understands your financial position and can offer you a loan suitable for your situation.
If you’re looking to buy a home in the Pacific Northwest region but don’t have the traditional income documentation to qualify for a conventional loan, we can help. At Sammamish Mortgage, we offer various self-employed mortgage home loan programs for those without traditional employment documentation in WA, OR, ID, CO, and CA. Visit our website to get an instant rate quote, or get in touch with us today to have your mortgage questions answered!
Whether you’re buying a home or ready to refinance, our professionals can help.
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No Obligation and transparency 24/7. Instantly compare live rates and costs from our network of lenders across the country. Real-time accurate rates and closing costs for a variety of loan programs custom to your specific situation.