When most people think about home loans, they’re thinking of conventional loans. These loans have strict income verification guidelines, allowing underwriters to verify a borrower’s income in only a few ways — with W-2s, tax returns, and pay stubs.

    However, not everyone has these documents, or they may not accurately reflect their full income. Some first-time buyers might be shocked to find out they don’t qualify for a traditional home loan because they don’t have the proper documentation.

    Self-employed individuals, retirees, business owners, gig workers, and entrepreneurs don’t have W-2s or paystubs because they don’t have traditional jobs. Meanwhile, these same individuals may take significant deductions during the tax season that reduce their taxable income, so tax returns aren’t always an accurate representation of someone’s financial health.

    If you don’t qualify for a conventional mortgage because of these factors, you may still qualify for a non-qualified mortgage — or non-QM loan — like an asset depletion mortgage. But what is an asset depletion loan, and is it the right option for you? Keep reading to learn more.


    • An asset depletion mortgage allows you to qualify for a home loan by converting liquid assets into income.
    • These home loans are best suited for individuals who don’t have traditional sources of income and documentation like W2s, pay stubs, or tax returns, such as the self-employed, retirees, and high-net-worth individuals.
    • Liquid assets you may use to qualify you for a mortgage include bank accounts, CDs, investment and retirement accounts, and money market accounts.

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    What is an Asset Depletion Mortgage?

    An asset depletion mortgage, also known as an asset-based home loan, is a type of mortgage loan that allows you to qualify by using your assets as income. Instead of other types of asset-based lending, asset-based mortgages don’t use your assets as collateral; lenders convert your assets into income to determine whether you have enough money to repay the loan.

    An asset depletion mortgage doesn’t require proof of employment income, which some borrowers may not have. For instance, if you’re looking for a mortgage when self-employed, you don’t have pay stubs or W-2s, and your tax returns likely don’t reflect the true state of your finances. If you don’t qualify for a traditional home loan, an asset depletion mortgage might be right for you.

    Asset depletion loans are also a retirement mortgage option because you can qualify using your bank and retirement accounts. These types of home loans can benefit individuals who don’t have a regular source of income or the documentation required by conventional loans.

    How Does an Asset Depletion Mortgage Work?

    An asset depletion loan lets you pay your mortgage by depleting your assets. You can only use liquid assets to qualify for a home loan, so your car, high-end art, and other expensive assets you own aren’t eligible.

    With an asset depletion mortgage, you borrow against your liquid assets, which may include:

    • Bank accounts (checkings & savings)
    • Certificates of deposits (CDs)
    • Retirement and investment accounts (stocks, bonds, and mutual funds)
    • Money market accounts

    There are limits on the amounts of your assets you can use to qualify for a loan. You can use 70% of your retirement assets, 80% of the remaining value of stocks and bonds, and 100% of your checking, savings, and money market accounts. So if you have $1,000,000 in retirement and investment accounts and $500,000 in your checking and savings accounts, you can use $1,200,000 in assets to qualify for an asset depletion loan.

    Once the lender determines your asset depletion mortgage eligibility, they can calculate the loan amount by determining your monthly income based on the loan terms.

    Senior couple sitting on couch calculating their finances.

    Your assets’ value, or rather, your income as determined by your assets, is not the only factor lenders consider. So even if you have $5 million in assets, you may still not qualify for a loan. For instance, you may be eligible for a home loan with bad credit, but if your credit score is below the minimum requirement set by the lender, your mortgage application may be denied.

    Asset depletion mortgages work similarly to any other type of mortgage. You must meet a lender’s criteria to be eligible.

    The only difference between these loans and other types of loans is what qualifies as income; instead of employment income, you can qualify for an asset depletion mortgage based on your assets. Therefore, you won’t be required to provide tax returns, pay stubs, or W-2s.

    However, your lender might request this information if you have them because they can help determine whether you can get approved for a home loan. For instance, if you work a full-time job and freelance, your lender may want to see your employment income and assets to determine eligibility and loan amount.

    How Is an Asset Depletion Loan Calculated?

    An asset depletion loan is calculated by converting your assets into income. As we touched on earlier, you can use up to 100% of liquid accounts (checking, savings, and money market), 80% of the remaining value of stocks and bonds, and 70% of retirement assets to qualify for an asset-based loan.

    When it comes to calculating qualifying income for an asset depletion loan, you have two options. You can either use a debt ratio calculation or a total asset calculation.

    With a debt ratio calculation, borrowers must have at least $1 million in qualified assets or 1.5 times the loan balance, whichever is the lesser of the two figures. Both of these figures must include net down payment, closing costs, and required reserves to qualify. Once you have determined net qualified assets, the calculation is as follows:

    Monthly Income=Net qualified assets / 84 months

    You can also calculate qualifying income for an asset depletion loan using a total asset calculation. In this case, your qualified assets must be able to cover the following expenses:

    • New loan amount
    • Down payment
    • Closing costs
    • Required reserves
    • 5 years of current monthly obligations

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    Are You Eligible for an Asset Depletion Loan?

    Income is an important qualifying criterion for determining whether you qualify for a loan and your loan amount. However, it’s not the only factor lenders consider.

    To determine if you’re eligible for an asset depletion loan, you can add up your liquid assets and use the formula we discussed above to determine your monthly cash flow, which lenders will consider your income. Then, they’ll compare that to your monthly debts to determine if you can afford to repay the mortgage loan.

    Graphic depicting a bar about 70% full with text that reads, “If you are >59 1/2 you may be able to use a portion of your retirement account assets.”

    Other eligibility requirements for asset depletion mortgages include the following:

    • Age to qualify using retirement accounts: If you want to qualify for an asset depletion mortgage using your retirement accounts (IRAs, 401ks, and so forth), you’ll need to be around retirement age, usually at least 59 ½ or older.
    • Down payment: Asset depletion mortgages are a higher risk for lenders because they don’t require employment or employment income verification. Many lenders mitigate their risk of lending to you by requiring a 20% down payment, which reduces the total loan amount. Exact down payment requirements vary by lender.
    • Minimum credit score: The credit score requirement varies by lender, but most like to see a score of at least 650, but some may accept credit scores as low as 620. A higher credit score can qualify you for a better interest rate, so it’s worth working to increase your score before applying for an asset depletion loan.

    What Are the Benefits of an Asset Depletion Mortgage?

    The main benefit of an asset depletion mortgage is qualifying with a home loan with verifiable liquid assets like your bank and investment accounts instead of employment income. As a result, these loans are attractive for high-net-worth individuals, retirees, and business owners who have significant assets but can’t prove employment income using traditional methods.

    Graphic showing a home in the palm of a hand with text that reads, “What Type of Home Can You Use the Loan for? Primary homes; Secondary homes; Investment properties”.

    Additionally, these mortgage loans don’t require a borrower’s debt-to-income ratio to be calculated in most cases and can be used for primary residences, investment properties, secondary homes, and various types of properties like houses, condos, townhomes, and manufactured homes.

    Who Is an Asset Depletion Loan Best Suited for?

    We’ve already touched on a few types of borrowers that can benefit from asset depletion loans, but let’s review them again to help you determine whether they’re the right fit for you. Asset depletion loans are best suited for:

    • Self-employed borrowers and business owners who take significant tax deductions
    • Retirees with substantial assets
    • High-net-worth individuals with no income but significant assets

    Apply for an Asset Depletion Mortgage

    An asset depletion mortgage can help you achieve your dreams of homeownership without verifying employment income. Instead, you can use your bank accounts, retirement savings, and investments as income to qualify for a home loan.

    Griffin Funding is a premier asset-based lender that can help you determine whether an asset depletion mortgage is right for you. If not, our mortgage experts can help you find the best home loan for your unique circumstances. Apply online with Griffin Funding today or contact us at 855-698-1098 to learn more about our mortgage offerings.

    With a simple 10-step mortgage process, Griffin Funding strives to make applying and securing a home loan easy, transparent, and quick.

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    Frequently Asked Questions

    What is the DTI ratio for an asset-based loan?

    Asset-based loans from Griffin Funding don't require us to calculate your DTI in most cases. Instead, we can determine whether you qualify for a home loan based on the value of your assets.

    Since DTI measures the percentage of your income that goes toward paying debts, lenders use it to determine if you can afford a mortgage payment on top of existing debts.

    This requirement varies by lender. However, they generally look for a percentage no higher than 43%.

    Is there an age limit for asset-based mortgages?

    You can apply for an asset-based mortgage if you're 18 years old using your bank accounts, investments, and other liquid assets to qualify. However, if you want to use your retirement account as income, you typically must be at least 59 ½ years old.

    Do you have to be retired to use retirement accounts as assets?

    Yes, you have to be at retirement age to use your entire retirement account as assets for an asset depletion mortgage. A portion of these assets will count for those who are 59 ½ years or older for most lenders.

    You may still qualify if you're not retirement age based on other assets like your bank accounts and investments.
    Bill Lyons

    Bill Lyons is the Founder, CEO & President of Griffin Funding. Founded in 2013, Griffin Funding is a national boutique mortgage lender focusing on delivering 5-star service to its clients. Mr. Lyons has 22 years of experience in the mortgage business. Lyons is seen as an industry leader and expert in real estate finance. Lyons has been featured in Forbes, Inc., Wall Street Journal, HousingWire, and more. As a member of the Mortgage Bankers Association, Lyons is able to keep up with important changes in the industry to deliver the most value to Griffin's clients. Under Lyons' leadership, Griffin Funding has made the Inc. 5000 fastest-growing companies list five times in its 10 years in business.