Asset Depletion Loans: How Retirees and Self-Employed Borrowers Qualify Without a W-2
By Josh Yoder
You have the assets. You have the balance sheet. But when a lender asks for W-2s or tax returns, that wealth suddenly becomes invisible.
That’s the problem asset depletion loans solve, and it’s exactly the scenario Jet Mortgage flagged in a recent broker update marketing a 60-month asset depletion program. Logan Finance is also featuring asset depletion in their September 14 Non-QM webinar with Rob Chrisman.
These are not fringe products. NASB and multiple wholesale lenders offer asset depletion as a standard Non-QM option. Here’s how the math works and who it fits.
What Is an Asset Depletion Mortgage?
An asset depletion mortgage, also called an asset qualifier or asset-based loan, converts your verified liquid assets into a monthly qualifying income figure. The lender divides eligible assets by a set number of months, and the result counts as your income for underwriting.
You do not sell anything. Your portfolio stays invested. You are demonstrating financial capacity, not committing your assets to repayment.
How the Math Works (Verified)
The core formula is:
Qualifying Monthly Income = Eligible Liquid Assets ÷ Divisor Months
Different lenders use different divisors. Based on published program guides:
| Program Type | Divisor | Monthly Income from $500K Assets | Notes |
|---|---|---|---|
| Non-QM / Aggressive | 60 months (5yr) | $8,333/mo ($100K/yr) | Produces 2x the income of a 120-month divisor |
| Standard Non-Agency | 120 months | $4,167/mo ($50K/yr) | Common divisor across wholesale programs |
| Conservative / Agency-style | 240–360 months | $1,389–$2,083/mo | Lower income figure, lower risk profile |
| NASB Standard | 84 months (7yr) | $5,952/mo ($71.4K/yr) | Confirmed via NASB Asset Depletion FAQs |
Note: NASB applies a 70% haircut to stocks, stock options, and mutual funds (NASB FAQ). Retirement accounts over age 59.5 count at 70–80%; under 59.5 they drop to 60–70% to account for withdrawal penalties. Cash-like assets (checking, savings, CDs) generally count at 100%.
A borrower with $750,000 in eligible retirement assets at age 60, after a 30% haircut (70% eligibility), produces $525,000 in qualifying assets. At NASB’s 84-month divisor: $6,250/mo in qualifying income.
Real Example (Verified)
From NASB’s asset depletion guide: a borrower with $900,000 in total assets allocates $200,000 to down payment and closing costs and reserves $50,000, leaving $650,000. At 84 months: $7,738/mo qualifying income.
A standard 120-month divisor on $1.5M in eligible assets produces $12,500/mo in qualifying income, consistent with published Non-QM program guides.
Who Should Consider It?
Retirees. A retiree with $2M in investments but only Social Security distributions has minimal taxable income. Asset depletion uses the portfolio, not the tax return, as the qualification source (per NASB FAQ).
Self-employed borrowers with low reported income. Many business owners deduct aggressively, reducing their 1040 income. A $500K brokerage account divided by 60 months produces $8,333/mo in qualifying income, independent of tax returns.
Early retirees and high-net-worth individuals. A borrower with substantial liquid holdings but no traditional employment can still qualify. NASB’s $200,000 minimum loan amount and 20%+ down payment requirement apply.
What Assets Count and What They Don’t
| Asset Type | Eligibility | Haircut / Notes |
|---|---|---|
| Checking, savings, CDs, money market | 100% | Standard liquid assets |
| Stocks, bonds, mutual funds | 70% | Market-volatility haircut applied |
| Retirement accounts (59½+) | 70–80% | Age-based; no early-withdrawal penalty |
| Retirement accounts (<59½) | 60–70% | Penalty-adjusted |
| Business accounts | Generally excluded | Requires additional review; not standard |
| Real estate equity, crypto | Excluded | Not counted in standard asset depletion |
The Tradeoffs
Asset depletion is a Non-QM product. That means rates are typically higher than conventional loans, down payments are commonly 20% or more, and reserve requirements are often 6–12 months of payments. Credit score minimums range from 660 to 700+.
The trade is simple: you accept slightly higher costs and stricter asset requirements in exchange for qualification that reflects your actual wealth, not a tax return.
The Bottom Line
If you are asset-rich but income-light, whether you’re a retiree, a self-employed business owner, or a high-net-worth individual with strategic tax planning, asset depletion is a real, regulated option. The math is straightforward, multiple lenders offer it, and the structure protects your portfolio while demonstrating repayment capacity.
Want to see whether asset depletion fits your portfolio? Talk to an AZM loan officer about Non-QM qualification options.
Disclosure: Asset depletion loans are Non-QM products and are subject to lender-specific guidelines, credit score minimums (typically 660+), and down payment requirements (20%+ common). The divisor period and asset haircuts vary by lender. Figures shown are based on NASB standard (84 months) and published program guides. This is not a commitment to lend. Actual terms depend on credit profile, asset verification, property, and lender guidelines. See NASB for full program details.
