How Much Can You Qualify for With an Asset Depletion Loan?

If you have $2 million, $3 million or $5 million sitting in investment and retirement accounts, figuring out how much mortgage you can qualify for should be easy.

Unfortunately, it usually isn't.

Asset depletion mortgage guidelines vary significantly from lender to lender. One lender may qualify you almost entirely based on the assets remaining after closing. Another may convert those assets into monthly qualifying income and combine that amount with your Social Security, pension, W-2 income or other recurring income.

Those differences matter because there is no universal asset depletion formula. Lenders can treat stocks, retirement accounts, Bitcoin, existing debt and money being used for your down payment differently. The exact same borrower can therefore qualify for dramatically different loan amounts depending on which lender and calculation are used.

For someone trying to buy a $2 million home, that can be the difference between being told you qualify for a $1 million mortgage and discovering that another asset depletion program could support a substantially larger loan.

Understanding how much you can qualify for with an asset depletion loan starts with understanding those different calculations, and making sure you are comparing more than one lender.

What Is an Asset Depletion Mortgage?

An asset depletion mortgage allows borrowers to qualify for a home loan using their assets rather than relying entirely on traditional employment income.

Instead of asking only how much you earn every month, the lender looks at the wealth you have already accumulated. Eligible assets may include cash, stocks, bonds, mutual funds, retirement accounts, cash-value life insurance and, with certain lenders, Bitcoin and Ethereum.

This can be especially useful for retirees, business owners, investors, executives and other high-net-worth borrowers whose tax returns or W-2s do not accurately reflect their ability to afford a home.

You may have $4 million invested but only $8,000 per month of reportable income. A traditional mortgage underwriter may see an income problem. An asset depletion lender sees a multimillion-dollar balance sheet.

The question then becomes how much of that balance sheet the lender will let you use.

The 2 Main Ways to Qualify With Asset Depletion

There are dozens of variations in asset depletion underwriting, but most of the programs we see ultimately fall into 2 broad categories.

Method 1: Qualifying With Assets Alone

The simplest asset depletion loan uses your assets as the primary basis for qualification.

The lender determines which assets are eligible, applies any required discounts and subtracts money that will no longer be available after closing. Depending on the program, existing liabilities may also reduce the assets available for qualification.

Consider a simplified example.

You have $2 million in eligible adjusted assets and plan to use $300,000 for the down payment.

That leaves $1.7 million after the down payment.

Under an asset-only program that allows the remaining eligible assets to support the loan directly, those assets could potentially support a mortgage of approximately $1.7 million before applying any other lender requirements.

This approach can be extremely powerful for someone with substantial wealth but little or no recurring income.

A retiree living primarily from investments may fit here. So might an entrepreneur who recently sold a company, an investor taking a sabbatical or someone intentionally keeping taxable income low.

You have the money. You simply do not have the paycheck traditional mortgage underwriting expects.

Method 2: Combining Assets and Income

The second approach can be even more useful when the borrower has substantial assets and recurring income.

Instead of choosing between your portfolio and your income, certain asset depletion programs allow the lender to use both.

For one calculation incorporated into LendFriend'sasset depletion mortgage calculator, eligible assets are adjusted according to applicable lender guidelines and divided over 60 months to create hypothetical monthly income. That amount can then be added to eligible recurring income, with the resulting qualification evaluated against applicable debts and mortgage expenses.

That recurring income could include things like:

• W-2 income: A borrower may still work but need additional qualifying power from a large investment portfolio.
• Social Security or pension income: Common for retirees who have substantial retirement assets but relatively modest monthly distributions.
• Retirement distributions: Certain recurring distributions may be usable alongside the assets themselves.
• Rental or other eligible recurring income: Depending on the particular program and documentation available.

This is where asset depletion gets interesting.

Imagine someone earning $12,000 per month who also has $3 million invested. Their income alone may not qualify them for the jumbo mortgage they want. Their assets alone may support the loan, but another lender's assets-plus-income calculation could produce an even higher approval.

LendFriend's calculator automatically compares the applicable approaches and uses the method producing the stronger estimated result.

You do not have to know which formula to choose before using it.

Why Asset Depletion Calculators Can Give Very Different Answers

There is no universal asset depletion formula.

That is probably the single most important thing to understand before applying for an asset depletion mortgage.

A bank may tell you that you qualify for a $1 million mortgage. Another lender may calculate $1.3 million. A third may approve substantially more.

They are looking at the same borrower and the same assets. They are just using different guidelines.

The differences can include how much of each asset the lender recognizes, whether assets used for the down payment must be deducted, how outstanding debt is treated, whether retirement assets are discounted, how cryptocurrency is valued, whether recurring income can be added and which asset depletion formula is permitted for that particular property and borrower profile.

Even credit score and property type can change which calculation is available.

That makes comparing asset depletion loans very different from shopping for a standard conventional mortgage.

The lender with the lowest advertised rate is irrelevant if its underwriting formula only allows you to qualify for a $900,000 loan when another lender can approve $1.4 million.

You first need to find the right calculation. Then you compare the rates and terms available within that group of lenders.

How the LendFriend Asset Depletion Calculator Works

Our Asset Depletion Mortgage Calculator was built to make that comparison easier.

You enter the home price, your expected down payment and the assets you have available. The calculator currently lets you include checking and savings accounts, money market accounts and CDs, marketable securities, retirement accounts, cash-value life insurance, eligible Bitcoin and Ethereum holdings and certain cash-out proceeds.

You can also enter existing debt and, if applicable, monthly income.

From there, the calculator evaluates the available qualification methods and estimates the strongest loan amount your financial profile may support.

If you are looking at a $2 million home with $400,000 down, for example, your requested loan amount is $1.6 million.

The calculator does not simply spit out an abstract monthly "asset depletion income" number and leave you to figure out what it means.

It tells you whether the entered financial profile appears sufficient for the $1.6 million loan you are trying to get.

If your assets appear sufficient, you can see an estimated maximum loan amount and maximum purchase price.

Maybe you were shopping for a $1.6 million mortgage but the calculator estimates your financial profile could potentially support $1.9 million. Now you know you may have more flexibility than you thought.

If the assets appear insufficient, the calculator works backward.

Maybe you want a $1.6 million loan but your current financial profile supports approximately $1.45 million. Instead of simply telling you "no," the calculator estimates the additional assets required to bridge that gap.

That gives you something useful to work with.

You could increase your down payment, add another eligible account, reduce an existing liability, look at a slightly lower purchase price or have LendFriend review whether another lender calculation could improve the result.

Your $3 Million Portfolio Is Not Necessarily Worth $3 Million to a Lender

One mistake borrowers make is assuming every dollar on an investment statement counts as one dollar toward mortgage qualification.

It does not always work that way.

Cash is highly liquid. Stocks can fluctuate. Retirement funds may have withdrawal restrictions or tax consequences. Cryptocurrency can move substantially in a short period.

Lenders account for those differences.

A lender may therefore use only a percentage of certain investments when determining eligible assets. Retirement-account treatment can depend on accessibility and program guidelines, while cryptocurrency qualification can depend on where and how the assets are held.

Money being used for the home purchase matters too.

If you have $2 million in investments but are taking $400,000 from those accounts for your down payment, you generally cannot pretend all $2 million will still be available after closing. LendFriend's calculator deducts the down payment from eligible assets when determining what remains available for qualification.

This is another reason a simple "assets divided by 60" calculation can be misleading.

The details matter.

Why Working With a Mortgage Broker Matters for Asset Depletion

For a conventional borrower with straightforward W-2 income, the difference between lenders may come down primarily to rate, fees and service.

Asset depletion is different.

The underwriting formula itself can determine whether you qualify.

A direct lender can generally tell you what its asset depletion program allows. It cannot necessarily tell you whether another lender would calculate your assets more favorably.

A mortgage broker can compare programs.

LendFriend Mortgage works with more than 40 wholesale lenders, including lenders specializing in asset depletion, jumbo and other non-QM mortgages.

That gives us the ability to look at the borrower first and the lender second.

If your strongest qualification comes from assets alone, we can focus on lenders with favorable asset-only calculations.

If your portfolio plus pension income produces a better result, we can look for programs that allow the 2 to work together.

If one lender heavily discounts the assets where most of your wealth is concentrated, another may be a better fit.

The goal is not to squeeze you into one institution's formula. It is to find the formula that works best for the financial profile you already have.

Find Out How Much You Could Qualify For

Asset depletion mortgages can make buying a home surprisingly straightforward for someone whose wealth is substantial but whose income does not fit traditional mortgage underwriting.

The complicated part has always been figuring out which lender calculation works best.

That is exactly what the LendFriend Asset Depletion Mortgage Calculator is designed to simplify.

Enter the house price, down payment, assets, debts and any income you want considered. The calculator evaluates multiple asset depletion approaches across the lender programs available to LendFriend and estimates the highest loan amount your profile may support.

If you already have a property in mind, it can estimate whether you have enough assets to support the requested mortgage.

If you do not, it can show approximately how much more mortgage your assets might support.

And if you appear to fall short, it can estimate how many additional assets may be needed to qualify.

The calculator is still an estimate. Final approval depends on lender underwriting, asset documentation, credit, reserves, property details, occupancy, interest rates and the specific loan program.

But it gives you something much more useful than a generic asset depletion formula: a realistic starting point for how much house your balance sheet may allow you to buy.

And if you want to know exactly which lender and calculation produced the strongest result, LendFriend Mortgage can take it from there.

The Bottom Line

Asset depletion loans can be one of the best mortgage options for borrowers who have substantial wealth but do not show enough traditional income to qualify for the mortgage they want.

The challenge is that there is no single asset depletion calculation. One lender may qualify you using assets alone. Another may combine your assets with W-2, pension, Social Security or other eligible income. Different lenders can also treat stocks, retirement accounts, cryptocurrency, debts and funds needed for closing differently. The same financial profile can therefore produce very different maximum loan amounts.

That is why the LendFriend Asset Depletion Mortgage Calculator looks across the qualification methods available through more than 40 lenders instead of relying on one formula. It estimates whether your assets support the mortgage you want, how much you could potentially qualify for and, if you fall short, approximately how many additional assets may be needed.

It is also why working with a mortgage broker matters so much for an asset depletion loan. LendFriend Mortgage can compare the lenders and calculations that fit your financial profile, then shop the strongest qualifying options for the best available rate and terms.

If you have spent years building your balance sheet, your mortgage approval should reflect it.