Asset Depletion Loans for Retirees and High Net Worth Borrowers
It’s insane that a lender could say you can’t afford a house you could write a check for. It happens constantly to retirees, and it happens because the standard mortgage question is “what do you earn each month,” not “what do you have.”
An asset depletion loan fixes this. We convert your savings, brokerage, and retirement balances into qualifying income, so the wealth you spent forty years building actually counts for something at the closing table.
★★★★★ 5-Star Client Reviews • Mortgage Loan Officer with Fairway Home Mortgage | Brazos Group • Salado, TX
Kevin had over $3 million dollars and struggled to get approved
Kevin came to me after struggling to get approval from a local bank. Retired, no W-2, no pay stubs, modest Social Security. On the income worksheet he looked like someone who couldn’t afford a payment.
He also had well over three million dollars in the bank. He could have purchased this home in cash 9-10 times.
The first lender he spoke with ran him through a conventional box, found no monthly income to plug in, and stopped there. They were answering the only question their program knew how to ask, and Kevin’s situation didn’t fit the box.
We restructured it as an asset depletion loan instead. His assets were converted into a monthly income figure, that amount comfortably supported the payment, and the file closed.
How the calculation works
The concept is pretty simple: we total your qualifying assets, then spread that total across a set number of months. The result is treated as monthly income for qualifying purposes.
Two things usaully catch people off guard:
Not every dollar counts fully. Cash in checking and savings generally counts at or near full value. Stocks, bonds, and mutual funds are typically discounted, because their value moves. Retirement accounts can also be discounted depending on whether you’ve reached the age where you can draw without penalty.
You don’t have to liquidate anything. This is the question I get most, and the answer is no. Nobody is requiring you to sell investments or drain an account. The calculation is a qualifying method, not a withdrawal plan. Your money stays exactly where it is.
It can stack with other income
Asset depletion isn’t all-or-nothing. Social Security, a pension, an annuity, rental income, or part-time consulting work can be counted alongside it. Most retirees I work with qualify on a combination, not on assets alone.
Who this is for
- Retirees with substantial savings and little or no employment income
- Business owners who recently sold and are sitting on proceeds
- People living off investment income that doesn’t show as a paycheck
- Borrowers who received an inheritance or a legal settlement
- Buyers with high net worth and deliberately low taxable income
The pattern is consistent. These are the most financially secure borrowers I work with, and they’re the ones most likely to be told no by a lender reading a form.
Why this comes up so often in Central Texas
Salado, Belton and Georgetown all tend to draw retirees because of low cost of living, a great central location, and proximity to healthcare facilities. They land with significant proceeds and no income, which is precisely the profile that breaks a conventional application. Add retired military from Fort Hood with pensions, and this comes across my desk regularly.
Check conventional first
Here’s something a lot of retirees don’t know, and it’s worth knowing before anyone sells you a Non-QM loan.
Conventional financing has its own version of this. Fannie Mae and Freddie Mac both allow certain retirement and investment assets to be converted into qualifying income under their standard guidelines. The rules are narrower than the Non-QM version — the eligible asset types are more restricted and the divisor is generally less generous — but when it works, it’s the cheaper loan.
So that’s where I start. If conventional asset-based qualifying supports your purchase, we use it. If it falls short, we move to the Non-QM version, which is more flexible about which assets count and how they’re spread. Either way you should see both, not just whichever one the loan officer sells most of.
What you’ll need
- Recent statements for every account you want counted — checking, savings, brokerage, retirement
- Documentation of any other income: Social Security award letter, pension statement, annuity, rental agreements
- A paper trail for large recent deposits, especially proceeds from a home sale or business sale
- No tax returns or employment verification in most cases
One practical note: if you’re moving money between accounts to consolidate before buying, tell me first. Transfers are easy to document at the time and a headache to reconstruct two months later.
The honest tradeoffs
The Non-QM version can cost more than conventional. Sometimes these programs have higher rates and larger down payment requirements. That’s the price of the flexibility, which is exactly why we check conventional first.
The divisor drives everything. Two lenders can look at the same assets and produce very different qualifying incomes purely based on how many months they spread it over.
Market timing can matter. Since investment balances are valued from statements, a rough month in the market can lower your qualifying income at exactly the wrong moment. Not usually decisive, but worth knowing if you’re close to a threshold.
Paying cash isn’t automatically better. Plenty of my retired clients could buy outright and choose to finance anyway, to keep money invested and preserve liquidity. That’s a conversation for you and your financial advisor rather than for me; I’m not licensed to advise on it, and anyone in my seat who tells you otherwise should give you pause.
Traditional Income Isn’t The Only Way To Qualify
A no from a bank who only looks at monthly income isn’t the same as an absolute no. Tell me what you have and what you’re trying to buy, and I’ll tell you honestly whether it works — starting with conventional, because that’s usually the better deal when it fits.
I’m David Laws, a mortgage loan officer based in Salado, working with retirees and asset-rich buyers across Bell County and Central Texas.
Program availability, guidelines and requirements vary by lender and are subject to change without notice. This is not a commitment to lend. All loans are subject to credit and property approval. Not all applicants will qualify. Information on this page is for educational purposes only and is not investment, tax or legal advice.