What Is an Asset Depletion Mortgage?
An Asset Depletion Mortgage (also known as asset-based lending) is a type of home loan where borrowers qualify based on liquid assets instead of traditional income. It’s designed for borrowers who have substantial savings or investments but don’t receive a regular paycheck—such as retirees, entrepreneurs, or real estate investors living off rental income or capital gains.
Rather than looking at tax returns or pay stubs, lenders calculate a hypothetical monthly income based on your assets and use that to determine loan eligibility.
How Asset Depletion Loans Work
Lenders use a formula to "deplete" your assets over a set period (typically 60 or 120 months) and treat the result as your qualifying income.
Common Calculation Example:
- Liquid assets: $1,000,000
- Depletion term: 120 months (10 years)
- Qualifying monthly income: $1,000,000 / 120 = $8,333/month
This estimated income is used in your debt-to-income (DTI) ratio, just like a salary would be in a conventional loan.
