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By Adam Styer, NMLS #513013 · Updated 2026-05-17
An asset depletion mortgage lets a Texas borrower qualify for a home loan using their liquid assets — cash, brokerage, retirement accounts — when employment income is not the best fit for the file. The lender adds up eligible assets, subtracts the down payment, closing costs, and required reserves, then divides what is left by a set number of months. That monthly number becomes qualifying income for the debt-to-income calculation. Your assets stay invested. You never have to actually withdraw the money.
Who Asset Depletion Is Built For
- Retirees with seven-figure portfolios and modest Social Security or pension income who fail conventional DTI on a $1M+ Texas home.
- Founders post-exit sitting on liquidity from a business sale, equity buyout, or IPO who have no current W-2 income.
- High-net-worth W-2 borrowers whose total compensation is real but whose base-salary-only DTI calculation kills the file.
- Trust beneficiaries with substantial assets in a revocable trust but irregular distribution income.
- Pre-retirees in their late 50s or early 60s who have already left full-time work and live off portfolio income.
For a broader view of high-balance and private-wealth lending strategy, see the high-net-worth mortgage guide. This page goes deep on asset depletion specifically — how the divisor math actually changes your loan amount, where each program fits, and how to avoid the gotchas that kill HNW files.
The Divisor Decision — Why the Lender You Choose Changes Your Loan Amount by 3–6x
This is the single most important table in asset depletion lending, and it is almost never published. The qualifying income you get from a $2M portfolio is not a fixed number. It depends entirely on the divisor the lender uses. Same borrower, same portfolio, same down payment — different lender, completely different loan amount.
| Program | Divisor | Age Rule | Asset Scope | Max LTV |
|---|---|---|---|---|
| Fannie Mae (B3-3.1-09) | 360 months | Under 62 = retirement only; 62+ = broader | Limited (retirement-heavy under 62) | 70% under 62 / 80% at 62+ |
| Freddie Mac §5307.1 | 240 months | At least one borrower 62+ for non-retirement assets | Cash, securities, retirement (no crypto) | Per agency jumbo / conforming rules |
| Non-QM (conservative) | 120 months | Any age, retirement haircut if under 59½ | Broad — cash, brokerage, retirement | Up to 80% (program-dependent) |
| Non-QM (standard) | 84 months | Any age, retirement haircut if under 59½ | Broad | Up to 80% |
| Non-QM (aggressive) | 60 months | Any age, retirement haircut if under 59½ | Broad | Often capped at 70–75% |
Why this matters in dollars: dividing $2M of net eligible assets by 60 months produces $33,333/mo of qualifying income. Dividing the same $2M by 360 months produces $5,555/mo. That is a six-times difference on the exact same borrower. For Austin's $1M–$3M jumbo tier, the lender choice routinely changes the home you can afford by a million dollars or more.
Worked Example — $3M Liquid Net Worth, Austin Purchase
Borrower profile: 56-year-old founder, sold business two years ago, no current W-2 income. $2M in a taxable brokerage account, $1M in a traditional IRA. Looking at a $1.4M home in West Austin, 25% down, 800 credit.
Asset Stack — Net Eligible
Taxable brokerage: $2,000,000 (100%) = $2,000,000
Traditional IRA, age 56: $1,000,000 (lender haircut applied) = discounted
Less 25% down on $1.4M: −$350,000
Less closing costs (est.): −$25,000
Less required reserves (12 mo PITI est. $84,000): −$84,000
Net eligible assets (approx.): ~$2.2–2.4M depending on retirement haircut
Qualifying monthly income at each divisor (illustrative, using ~$2.3M net):
| Divisor | Qualifying Monthly Income | Approx Loan Amount Supported (43% DTI)* |
|---|---|---|
| Fannie 360-mo | ~$6,400/mo | ~$400K–$475K loan |
| Freddie 240-mo (§5307.1) | ~$9,600/mo | ~$650K–$725K loan |
| Non-QM 84-mo | ~$27,400/mo | ~$1.9M–$2.1M loan |
| Non-QM 60-mo | ~$38,300/mo | ~$2.7M–$3M loan |
*Illustrative only. Actual loan amount supported depends on rate, term, taxes, insurance, HOA, other debts, and program-specific DTI caps. The Fannie/Freddie age rules also limit eligibility under 62.
This founder, age 56, is locked out of Freddie's 240-month divisor (needs a borrower 62+ for the non-retirement asset path) and capped at 70% LTV under Fannie. Non-QM is the right answer — competitive non-QM pricing in exchange for three to six times the qualifying income. The lender choice is not a rate question. It is a "what house can you actually buy" question.
Eligible Assets, Line by Line
Counted at 100% (typically)
- Cash and savings — checking, savings, money market accounts. Seasoned at least 60 days.
- Taxable brokerage accounts — mutual funds, ETFs, individual stocks, bonds. Most lenders count at full vested value; some apply a small securities haircut.
- Vested public-company stock — only the vested portion. Unvested RSUs do not count.
- Certificates of deposit, Treasury bills, money market funds.
Counted with a haircut
- Retirement accounts (IRA, 401(k), 403(b), Roth) — lenders typically apply a haircut when the borrower is under 59½ to account for the 10% early-withdrawal penalty and ordinary income tax due on traditional accounts. The haircut eases at 59½+. Exact percentage is lender-specific.
- Annuities — counted if the surrender value is documented. Surrender charges may reduce the eligible figure.
- Pre-IPO equity / restricted private stock — heavily discounted and program-specific. Not eligible on agency. Sometimes accepted at a steep haircut on non-QM with a fairness opinion or recent funding-round valuation.
Generally not eligible
- Cryptocurrency — Freddie §5307.1 explicitly excludes. Most non-QM lenders exclude. The path is to liquidate to cash, season 60–90 days, document the source.
- Real estate equity — not a liquid asset. (Cash-out refi or HELOC against real estate is a separate strategy.)
- Business operating equity — owners' equity in a closely-held operating business is not depletable. Liquidating sale proceeds are.
- Pledged or encumbered assets — anything serving as collateral on a securities-backed line of credit (SBL) or margin loan is netted against the SBL balance, often eliminating the depletion benefit entirely.
The Methodology — Three Formulas Worth Knowing
Freddie Mac §5307.1 (age 62+ borrower path)
Net Eligible Assets = (Cash + securities + retirement × factor)
− Down payment
− Closing costs
− Required reserves
Qualifying Monthly Income = Net Eligible Assets ÷ 240
Fannie Mae employment-related assets (B3-3.1-09)
Net Eligible Assets ÷ Loan Term in Months (typically 360)
LTV capped at 70% under age 62, 80% at 62+
Non-QM aggressive (60-month)
Net Eligible Assets ÷ 60
Any borrower age, retirement haircut applied if under 59½
Pricing above conventional; LTV typically capped at 70–75%
Note one important nuance — these are qualifying income formulas, not withdrawal schedules. The 240-month or 60-month divisor does not mean you must withdraw the asset over that period. You can leave the portfolio invested, and pay the mortgage from any source. The math is a lender's risk-capacity test, not a forced liquidation plan.
Common Gotchas That Kill HNW Asset Depletion Files
1. Seasoning on recent large deposits
If $1.5M just landed in your brokerage account from a business sale, IRA rollover, or wire from another institution, expect to document the source. Most lenders want 60–90 days of seasoning, or full paper trail to the originating event (closing statement on the business sale, rollover paperwork, etc.). Surprise wires kill timelines.
2. Pledged assets behind a securities-backed line of credit
An SBL or margin loan against your brokerage account converts that account into pledged collateral. Lenders net the pledged portion against the SBL outstanding balance. If you've drawn $500K on a $2M SBL, only $1.5M counts toward depletion. If the SBL is undrawn but the agreement is in place, some lenders still discount.
3. Joint accounts with non-borrowing spouses or family
Texas is a community property state, which helps with marital accounts. For accounts owned with adult children, parents, or non-spouse partners, only the borrower's proportional share counts, unless the co-owner signs an access letter. We sort this case by case.
4. "Currently a source of income" double-count problem
If you are already drawing $4,000/mo from an IRA for living expenses and reporting it as retirement income, Freddie §5307.1 will not let you also count those same assets through depletion math. Pick one — depletion math or current income. Strategic answer is often to stop the recurring withdrawals 90 days pre-application, season, and re-elect on the other side.
5. Business operating equity is not liquid
The most common HNW misconception. Owning 100% of a profitable operating company does not give you depletable assets. The cash inside the company is not yours personally. The equity in the company is not liquid. Liquidating proceeds from a sale are. We've structured many files where a pending sale becomes the depletion source — the timing matters.
6. Crypto in any form
Freddie excludes outright. Non-QM lenders almost all exclude. The reliable path is liquidate to cash, document the exchange transaction, season 60–90 days. If you need crypto in the asset stack at closing, plan that timing into the file from day one.
7. Trust-owned and family-LP assets
Revocable trust where you are grantor and trustee — generally fine, full asset count. Irrevocable trust where you are a beneficiary — distributions, not asset value, are what lenders typically use. Family Limited Partnership interests are heavily discounted or excluded depending on lender. Trust documents get read.
When Asset Depletion Beats Bank Statement, DSCR, or Conventional
Asset depletion is not always the right answer. The decision usually comes down to where your income and assets sit.
| Borrower Profile | Best Fit |
|---|---|
| Retiree, $2M+ liquid, modest Social Security only | Asset depletion (Freddie §5307.1 at 62+; non-QM otherwise) |
| Founder post-exit, large brokerage account, no W-2 | Non-QM asset depletion (60–84 mo) |
| Self-employed with strong cash flow, modest liquid assets | Bank statement loan |
| Real estate investor buying a Texas rental | DSCR loan |
| HNW W-2 borrower with high DTI | Asset depletion stacked on W-2 (non-QM) |
| Borrower with substantial K-1 income | See K-1 income mortgage — agency-eligible at 25%+ ownership |
Asset Depletion Mortgage FAQ — Texas
An asset depletion mortgage qualifies you using your liquid assets when employment income is not the best fit for the file. The lender adds up eligible assets (cash, brokerage, retirement), subtracts the down payment and reserves, then divides the remainder by a set number of months to produce a monthly qualifying income figure. Fannie uses 360 months. Freddie §5307.1 uses 240. Non-QM divisors run 60–120 months.
The shortest eligible divisor produces the most qualifying income. Freddie §5307.1 (240 months) typically beats Fannie (360) for borrowers age 62+. Non-QM programs at 60–84 months produce three to six times the qualifying income of Fannie, with a rate premium. The right answer depends on age, asset mix, loan size, and whether you also want a competitive jumbo rate.
Cash and cash equivalents, taxable brokerage accounts, mutual funds, money market accounts, vested stock holdings, and retirement accounts. Retirement accounts are typically discounted when the borrower is under 59½ to account for early-withdrawal penalty and tax. Freddie §5307.1 explicitly excludes cryptocurrency. Pledged assets and assets owned jointly with non-borrowers count only at the borrower's share.
No. Asset depletion is a qualification method, not a withdrawal requirement. The lender uses the math to confirm you have enough capacity to repay. Your assets stay invested. You can still earn dividends, interest, and capital gains. This is the entire point — keep the portfolio working, use it to qualify, and pay the mortgage from whatever income source you choose.
Yes, but the rules tighten. Under Fannie, borrowers under 62 are limited to retirement assets and capped at 70% LTV. Freddie §5307.1 requires at least one borrower be 62+ to count non-retirement liquid assets. Non-QM lenders are far more flexible — most accept all liquid assets at any age, with the trade-off being a rate premium above conventional.
Yes. Virtually all non-QM asset depletion programs allow you to stack depletion income on top of documented W-2 wages, self-employment income, K-1 income, Social Security, pension, or rental income. This is the strategy for high-DTI but high-asset borrowers — depletion fills the income gap rather than replacing other sources entirely.
Yes. Lenders typically apply a haircut to retirement balances (IRA, 401(k), 403(b)) when the borrower is under 59½ because of the early-withdrawal penalty and income tax due. At 59½+, the haircut eases. The exact percentage is lender-specific. If you are already drawing from retirement as a current income source, Freddie §5307.1 will not let you double-count those same assets.
Most asset depletion programs require 20–30% down, 680+ credit, and meaningful reserves (6–24 months PITI) on top of the down payment. Fannie caps LTV at 70% under 62 and 80% at 62+. Non-QM allows higher LTV at a rate premium. For a $2M Austin purchase plan on $400K–$600K down plus reserves still in the brokerage after closing.
Freddie Mac §5307.1 explicitly excludes cryptocurrency. Fannie does not list it as eligible. Non-QM lender treatment varies — most exclude outright, a handful will count converted-to-cash crypto with seasoning. The cleanest path is to liquidate, season the cash 60–90 days, and document the source. We'll structure that timing into the file from day one.
Two to three months of statements on every qualifying account, photo ID, the appraisal, a property purchase contract, and asset seasoning documentation if balances are recent (business sale proceeds, IRA rollovers, large transfers). A signed letter explaining any large recent deposit. tax returns may not need to be the primary income document on most non-QM asset depletion programs. Conventional asset depletion still pulls returns.
Jointly-held accounts count only at the borrower's proportional share unless the co-owner signs an access letter. Revocable trust assets where the borrower is grantor and trustee usually count fully. Family limited partnership interests and irrevocable trust distributions are more complicated and lender-specific — we structure these case by case.
25–35 days is typical. Asset depletion files run faster than bank statement files because the underwriter is looking at brokerage statements and account balances, not parsing deposits. The two friction points are seasoning of recent large deposits (60–90 days) and joint-account verification. Clean documentation up front cuts the timeline to the low end of that range.
Quick Answers About Asset Depletion Mortgages
What is an asset depletion mortgage?
An asset depletion mortgage uses eligible assets to calculate qualifying income. It can help retirees, founders, executives, and high-net-worth borrowers whose liquid assets are stronger than their monthly taxable income.
Do assets have to be pledged?
Not always. Asset depletion is often a documentation method, not a pledge. Some private-bank or securities-backed structures may encumber assets, so Adam compares the mortgage structure before the borrower assumes the assets must be moved or pledged.
Which assets may be considered?
Eligible assets may include cash, brokerage accounts, retirement accounts, and certain trust or jointly held assets, depending on ownership, access, seasoning, and lender rules. Crypto and illiquid private holdings are more restricted and must be reviewed carefully.
Asset Depletion vs No-Ratio Jumbo vs Conventional Jumbo
| Path | Best fit | Main trade-off |
|---|---|---|
| Asset depletion | Strong liquid assets and limited monthly income | Asset eligibility, access, and divisor rules matter |
| No-ratio jumbo | High-asset borrowers who want less income calculation | Usually requires stronger equity, reserves, and pricing tolerance |
| Conventional jumbo | Borrowers with clean income and strong balance sheet | More documentation, but often better pricing when it fits |
Reviewed by Adam Styer, NMLS #513013. Adam is licensed in Texas through Mortgage Solutions LP, NMLS #2526130. This page is educational and is not a commitment to lend.
Related Complex-Income Pages
Asset depletion is one of several ways to qualify for a Texas mortgage outside the conventional box. Depending on your full picture, one of these may fit better — or stack with depletion:
- Asset Depletion Mortgage Austin TX — Austin page for founders, executives, retirees, and high-net-worth borrowers whose assets tell the clearer story.
- High-Net-Worth Mortgage — broader strategy for private-wealth borrowers, including pledged-asset and SBL options.
- Non-QM Loans — the full Non-QM landscape including bank statement, asset depletion, and ITIN.
- Bank Statement Loans — for self-employed borrowers with strong cash flow but heavy write-offs.
- Self-Employed Mortgage Austin — overview of how self-employed Austin borrowers get approved across all program types.
- Mortgage for Business Owners (Austin) — strategy guide for owners of operating companies.
- K-1 Income Mortgage — partnership and S-corp owner qualification, agency-eligible at 25%+ ownership.
- Investor Loan Programs — DSCR and full menu of options for real estate investors.
Run Your Asset Depletion Numbers
Send me your account balances and I'll model Fannie, Freddie, and non-QM divisors side by side — usually same day. tax returns may not need to be the primary income document.
Model Asset-Based Options Book a 15-Minute Call →Or call (512) 956-6010 — NMLS #513013