Asset-Based & Asset-Depletion Mortgage Financing
Asset-based and asset-depletion mortgage programs may provide alternative qualification options for eligible borrowers with substantial financial assets whose traditional income documentation may not fully represent their financial capacity. Depending on the program, eligible assets may be considered as part of the borrower's qualifying income or overall financial profile.
Overview
What Is Asset-Based Mortgage Financing?
Asset-based mortgage financing may allow certain eligible financial assets to play a greater role in mortgage qualification. Instead of relying exclusively on traditional employment income, certain lenders may evaluate a borrower's:
- Liquid assets
- Investment accounts
- Retirement assets when eligible
- Cash reserves
- Overall net worth
- Other acceptable financial assets
Having substantial assets does not automatically guarantee mortgage approval.
Asset Depletion
Asset Depletion Explained
Asset depletion is an underwriting method in which an eligible portion of a borrower's qualifying assets may be converted into a calculated monthly income amount according to the lender's guidelines.
This does not necessarily require the borrower to spend or liquidate all of those assets. The calculation varies significantly by lender and program.
No universal asset-depletion formula is published here. Calculation methods vary by lender and program.
Eligible Borrowers
Who May Consider Asset-Based Financing?
Eligibility depends on the lender and complete financial profile.
Retirees
Borrowers with savings, investments, retirement accounts, Social Security, or pensions.
High-Net-Worth Borrowers
Substantial net worth but relatively low traditional taxable or employment income.
Investors
Real estate or financial investors with significant investment portfolios.
Entrepreneurs
Business owners whose taxable income may not reflect their full financial capacity.
Self-Employed Borrowers
May have multiple qualification paths including asset-depletion programs.
Borrowers With Significant Savings
Accumulated liquid assets that may support alternative qualification.
Borrowers With Investment Portfolios
Brokerage, mutual fund, or other eligible investment accounts.
Borrowers With Irregular Traditional Income
Income that may not fit standard documentation requirements.
Asset Eligibility
Potentially Eligible Assets, Special Review & Documentation
Potentially Eligible
Potentially Eligible Assets
Depending on lender guidelines, potentially eligible assets may include:
- Checking accounts
- Savings accounts
- Money-market accounts
- Certificates of deposit
- Brokerage accounts
- Stocks and bonds
- Mutual funds
- Certain retirement accounts
- Other lender-approved liquid financial assets
Not every asset automatically qualifies.
Special Review
Assets That May Require Special Review
Certain assets may receive different treatment or may not qualify. Examples may include:
- Retirement accounts subject to withdrawal restrictions
- Business assets
- Restricted securities
- Cryptocurrency
- Trust assets
- Foreign assets
- Assets pledged as collateral
- Assets required for closing
- Assets that cannot be adequately documented
Eligibility varies by lender.
Closing Assets
Assets Used for Closing
Assets required for the down payment, closing costs, or required reserves may be deducted before determining assets available for an asset-depletion calculation.
The same dollar generally cannot be counted simultaneously for every qualification purpose.
Documentation
Documenting Assets
Lenders may request:
Borrower Profiles
High-Net-Worth, Retirees & Self-Employed
High-Net-Worth
High-Net-Worth Borrowers
Some borrowers have substantial net worth but relatively low traditional taxable or employment income. Asset-based mortgage programs may provide an alternative method for evaluating financial capacity when appropriate.
Not described as guaranteed financing for wealthy borrowers.
Retirees
Retirees
Retired borrowers may have substantial savings, investments, retirement accounts, Social Security, pensions, or other financial resources. Depending on the program, a lender may consider a combination of traditional retirement income and eligible assets.
Self-Employed
Self-Employed Borrowers
Self-employed borrowers may potentially have several qualification paths. Depending on their circumstances, these may include:
- Traditional income documentation
- Bank Statement Loans
- Asset-Depletion Programs
- Other Non-QM programs
How It Compares
Asset-Based vs. Bank Statement, DSCR & Hard Money
Program Comparison
Bank Statement
Primarily evaluates qualifying cash flow or deposits using alternative income documentation.
Asset-Based / Asset Depletion
May rely more heavily on eligible accumulated financial assets when calculating financial capacity.
The appropriate program depends on the borrower's complete financial profile.
Program Comparison
Asset-Based
Primarily focuses on the borrower's eligible financial assets.
DSCR
Primarily focuses on the qualifying rental cash flow of an investment property, together with other lender requirements.
Program Comparison
Asset-Based Mortgage
May use a borrower's financial assets as part of qualification for longer-term mortgage financing.
Hard Money / Bridge
Typically emphasizes the real estate collateral, equity, transaction, and exit strategy and is generally shorter-term financing.
Underwriting Factors
Credit, Equity, Property & Loan Structure
Credit
Credit Requirements
Asset-based programs may still have credit requirements. Credit may affect:
- Eligibility
- Pricing
- Loan-to-value
- Down payment
- Reserve requirements
- Available programs
Substantial assets do not necessarily eliminate credit requirements.
Down Payment
Down Payment & Equity
Down-payment and equity requirements vary according to:
- Lender
- Program
- Credit
- Property
- Occupancy
- Loan amount
- Available assets
- Overall borrower profile
No universal minimum percentage is published here.
Reserves
Reserves
Certain lenders may require assets remaining after closing as financial reserves. Requirements vary by program.
No universal reserve requirement is published here.
Property Types
Property Types
Asset-based programs may potentially be available for eligible:
- Primary residences
- Second homes
- Investment properties
- Single-family homes
- Condominiums
- Townhomes
- 2–4 unit residential properties
- Other eligible properties
Availability varies by lender.
Loan Purpose
Purchase & Refinance
Depending on the program, asset-based financing may potentially be available for:
- Property purchase
- Rate-and-term refinance
- Cash-out refinance
- Other eligible mortgage transactions
Cash-out availability is not guaranteed.
DTI
Debt-to-Income
Some asset-based programs may use calculated asset-depletion income when evaluating debt-to-income. Other programs may combine calculated asset income with other qualifying income.
Debt-to-income is not universally ignored.
LTV
Loan-to-Value
Available loan-to-value may depend on:
- Credit
- Property
- Occupancy
- Loan amount
- Asset profile
- Documentation
- Lender guidelines
No universal maximum LTV is published here.
Appraisal
Appraisal
An appraisal or other acceptable property valuation may be required. Asset-based qualification does not eliminate property underwriting.
Rates & Terms
Interest Rates & Terms
Rates and terms vary according to:
- Market conditions
- Lender
- Credit
- Loan-to-value
- Property type
- Occupancy
- Loan amount
- Documentation
- Overall borrower profile
Current rates are not published here.
Getting Started
Questions to Ask
Prosper Path Group
The Big Picture
"Financial strength can be demonstrated in different ways."
Prosper Path Group can help evaluate whether the borrower may be better suited for:
Ready to Explore Options?
Let's Review Your Financial Profile
Tell us about your assets, income structure, property, credit profile, loan purpose, and financing goals. Prosper Path Group can help identify financing programs that may appropriately reflect your overall financial strength.
Asset-based, asset-depletion, Non-QM, and alternative mortgage programs, rates, terms, asset eligibility, documentation requirements, credit standards, down-payment requirements, loan-to-value limits, reserve requirements, property eligibility, borrower eligibility, and underwriting guidelines vary by lender and transaction. Not all assets are eligible for qualification, and assets used for closing or required reserves may receive different treatment. Asset ownership does not guarantee mortgage approval. Not all borrowers or properties will qualify. This information is provided for general educational purposes and is not a commitment to lend.
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