There’s a category of borrower that conventional mortgage underwriting handles badly: the person with substantial wealth and an unremarkable income line.
Retirees living on portfolio distributions. Founders after an exit. Investors whose returns don’t arrive as a monthly salary. In each case the balance sheet is strong, the ability to pay is obvious to anyone looking at it, and the standard application has almost nowhere to record it.
Asset depletion lending exists to solve that specific mismatch.
The core idea
Conventional underwriting asks how much do you earn each month? and tests your debts against that figure.
Asset depletion asks a different question: if we converted your assets into a monthly figure over a defined period, what would that figure be? That result is then used the way employment income would be used.
The name is unfortunate, and it puts people off. Nothing is actually depleted. You aren’t required to spend down your portfolio, liquidate holdings, or draw on anything. It’s a calculation method — a way of translating a balance sheet into the monthly number underwriting needs — not an instruction about what you do with your money.
How the calculation works
The mechanics are simpler than the name suggests. In general terms:
- Eligible assets are identified and documented. Not everything on your net worth statement will count.
- Discounts are applied to certain asset classes, reflecting volatility, accessibility, or tax treatment.
- The adjusted total is divided across a set number of months.
- The result becomes a qualifying figure used in the debt-to-income calculation.
The divisor is where programs differ most, and it matters enormously. Assets spread over 60 months produce a much larger monthly figure than the same assets spread over 120 or 360. Two lenders can look at identical assets and reach very different conclusions purely because of this one variable.
If you’re comparing programs, this is the question to ask first: over how many months are assets divided, and which assets are eligible? Everything else is detail by comparison.
[Client to complete: insert HomePort’s actual divisor and eligible asset classes here.] This paragraph is where this post earns its search traffic. “Asset depletion calculation” is exactly what people are searching for, and a page that publishes the real method will outrank a dozen pages that describe it vaguely.
Which assets typically count
Programs vary, so treat this as the general shape rather than a rule:
Usually counted in full or close to it
- Checking and savings balances
- Money market accounts
- Certificates of deposit
Usually counted at a discount
- Brokerage and investment accounts, reflecting market volatility
- Stocks, bonds, and mutual funds
- Retirement accounts, often with an additional adjustment, and sometimes only if you’ve reached an age where you can access them without penalty
Usually excluded
- Equity in the property being financed
- Business assets that aren’t personally held
- Illiquid holdings that can’t be readily valued or accessed
- Anything that can’t be documented through statements
There may also be a seasoning requirement — assets need to have been in place for a defined period rather than having appeared last month. This is a fraud control, not an obstacle for genuine borrowers, but it’s worth knowing about if you’ve recently consolidated accounts.
Who this actually suits
Asset depletion tends to fit borrowers who share a particular shape:
- Retired or semi-retired buyers with a substantial portfolio and modest taxable income.
- Post-liquidity-event borrowers — a business sale, an inheritance, an equity event — who have significant capital and no current salary.
- Investors whose returns are irregular, reinvested, or structured in ways that don’t produce a clean monthly income line.
- Business owners whose reported income is suppressed by deductions but who have built up real reserves.
- Anyone declined conventionally on debt-to-income despite an obvious ability to carry the payment.
What it doesn’t solve
Worth being direct about the limits.
It doesn’t replace credit. These programs generally require a strong credit profile. Assets don’t compensate for a damaged credit file.
It doesn’t reduce the equity you need. Asset-based qualification typically comes with a meaningful equity requirement. The programs work partly because the borrower is bringing substantial capital to the purchase.
It isn’t always the cheaper route. Loans qualifying outside conventional guidelines are priced differently. If you can document income conventionally without difficulty, compare both.
It doesn’t work without documentation. Assets have to be evidenced through statements from recognised institutions. Assets you can describe but not document won’t help the file.
What to have ready
For a first conversation, an outline is enough — nobody needs full statements to tell you whether the program is worth pursuing:
- Approximate liquid assets and where they’re held
- Approximate total assets, including retirement and investment accounts
- Rough credit range
- Purchase price or property value, and the equity you’re contributing
- Whether it’s a primary residence or a second home
- Any timeline you’re working to
The takeaway
If you’ve been told your income doesn’t support a loan you can plainly afford, the issue is usually the measuring instrument rather than your finances. Asset depletion is one of a small number of approaches built specifically for that gap.
It isn’t right for everyone, and a lender worth working with will tell you quickly if it isn’t right for you.