What is an asset depletion loan? (Great for Self-employed & Retirees)

Selfem Asset Depletion

Photo by Raj Rana on Unsplash

If you are sitting on a lot of assets (cash, savings, stocks, etc.) but don’t have a verifiable employer aka you’re not a W2 employee, then you need to keep reading. We cover everything from the what to how to qualify.  

You’re probably jaded from all the rejections the regular lenders have been giving you and just need a sign of hope. Here it is. 

Who is this for?

• Retiring Buyers • Founders post exit • Borrowers with savvy tax setup • Relocating borrowers pending a job

How does an asset depletion loan work?

Asset depletion loan allows you to qualify for a mortgage by using your assets (cash, savings, stocks, etc) instead of a regular paycheck that comes in the mail every month. 

You need to have a 110% of the loan amount being borrowed in liquid assets. The way lenders calculate your ability to pay the mortgage is by taking your total liquid assets and dividing it by 360 months (30 year mortgage) to see how much your monthly income is. 

Example: You have 1,000,000 in liquid assets. 1,000,000/360 = $2,777.78. Now let’s say that your mortgage payment is $1500. You should be able to qualify simply based on this calculation. 

So where the average borrower is using their job/monthly income as collateral, you’re using your assets as collateral. 

So what counts as assets? 

  • Checking & Savings Accounts
    • Money Market Accounts
    • Certificate of Deposits (CD’s)
    • Stocks, Bonds, and Mutual Funds
    • IRA’s and 401k’s

    Here’s the thing with using your assets as collateral. These assets can and do vary in prices throughout the life of your mortgage. Due to this lenders weight their calculations depending on the type of asset.

    Here’s a rule of thumb: 

    • Checking & Savings Accounts will be weighted 100% 

    • Money Markets, CD’s, Stocks Bonds, and Mutual Funds will be weighted 70% since these are exposed to volatility. 

    • Retirement accounts will be weighted at 50-70% depending on the age of the borrower. 


    • 110% of the loan amount being borrower
    • 10% down minimum with mortgage insurance  
    • Good Credit Score (620+)
    • No tax return needed

    Asset depletion is a great way to buy a home if you have significant assets and would like to use them as collateral.

    If you found this article helpful and are ready to start your home-buying journey, connect with an expert broker now.


    Selfem helps founders, freelancers, and small business owners buy a home by connecting them with an expert mortgage lender that specializes in self employed borrowers.