Asset depletion loans use your liquid assets such as savings, investments, and retirement accounts to calculate qualifying monthly income. Your assets are divided by the loan term in months.
For example, 00,000 in savings divided by 360 months equals ,389 per month of qualifying income. This is added to any other income you have.
This loan type is ideal for retirees, early retirees, or high-net-worth borrowers who have significant assets but limited monthly income.
How It Works
Lenders take your total eligible assets and divide by 180 or 360 months (depending on your age) to create monthly qualifying income. This income is added to your other income sources for qualification purposes.
Calculation Method
Example: 00K in IRA + 00K in savings = 00K total. 00K / 360 = ,222/month qualifying income. This is added to Social Security or pension income for qualification.
Asset Requirements
Eligible assets: cash and savings, stocks and bonds, mutual funds, retirement accounts (401k, IRA), and sometimes real estate equity (with restrictions). Ineligible: business assets, hard assets like cars.
Who Qualifies
Ideal for: retirees with significant retirement savings but limited monthly income, early retirees before Social Security kicks in, wealthy individuals with irregular income, and those transitioning between careers.
Rates and Terms
Rates are similar to conventional loans. Down payment of 20%+ is typical. Documentation includes account statements for all listed assets. No tax returns needed for the asset depletion calculation.
Alternatives
Before using asset depletion, consider simpler options: conventional loans (if you have other income), bank statement loans, or simply using assets for a larger down payment to reduce the loan amount.