By Ziya Y. · 23 Years Banking & Mortgage · Updated May 2026
📖 Real Scenario
Patricia is 62, recently retired, with $1.2M in a brokerage account and $400K in an IRA. Her Social Security is only $2,100/month — not enough to buy the $480,000 condo she wants. Her lender uses asset depletion: ($1.2M brokerage + $400K IRA × 70%) ÷ 360 months = $4,111/month additional qualifying income. Combined with SS: $6,211/month total. She qualifies comfortably.
Q: What is asset depletion for mortgage qualification?
Asset depletion (also called asset dissipation) is a method where lenders convert your liquid assets into a theoretical monthly income. The formula: take eligible liquid assets, divide by the loan term in months (typically 360 for a 30-year loan), and the result becomes qualifying income. It's designed for retired, wealthy, or asset-rich individuals with low traditional income.
Q: Which assets qualify for asset depletion?
Eligible: checking/savings accounts, brokerage/investment accounts, money market funds, IRA/401k/403b (at 70% of value), stocks and bonds. Not eligible: home equity, business assets, assets in a trust you don't control, retirement accounts with significant early withdrawal penalties if under 59½.
Q: What's the formula for retirement accounts?
For IRA/401k/403b: take the balance, multiply by 70% (to account for potential taxes and penalties), then divide by the number of months remaining on the loan. Example: $500,000 IRA × 70% = $350,000 ÷ 360 months = $972/month qualifying income.
Q: Do all lenders offer asset depletion?
No — it's a specialized program. Fannie Mae and Freddie Mac guidelines allow it, but not all lenders implement it. Jumbo lenders, private banks (like First Republic, now JPMorgan), and wealth management divisions of major banks are most likely to offer it. Non-QM lenders also have asset depletion programs, often with more flexibility.
Not financial advice. Educational content based on 23 years of mortgage experience. Consult a licensed MLO for your specific situation.