Loan option
Asset depletion loans
An asset depletion loan converts eligible assets into a qualifying income figure by dividing them over a number of months set by the lender. It is designed for borrowers with substantial assets and limited documentable income.
How it works
How asset depletion loans work
The lender identifies which of your assets are eligible, applies a discount to some categories, and divides the resulting figure by a set number of months to produce a monthly qualifying income. That figure is then used in the standard debt-to-income calculation.
Both halves of that calculation are set by the lender. Which accounts are eligible, what discount applies to retirement or volatile accounts, whether you must have reached a certain age to use retirement funds, and how many months the assets are divided over all vary, and they vary enough to change the outcome.
The assets usually need to be liquid or readily liquidated, seasoned, and documented across a recent period. Funds pledged as collateral elsewhere, or needed for the down payment and reserves, are generally excluded from the depletion calculation.
What to weigh up
- This is a qualifying method, not a product that ignores the rest of the file. Credit, the property and the appraisal are still underwritten.
- Assets used for the down payment and reserves generally cannot also be counted as qualifying income.
- Retirement account treatment often depends on your age and on the account type.
Set by the lender, not by us
These vary between lenders and change over time. Nothing on this page is a quote, an approval, or a commitment to lend.
- Which asset types are eligible and what discount is applied to each
- The number of months assets are divided over
- Whether age restrictions apply to retirement accounts
- Seasoning and documentation requirements
- Minimum credit score and maximum loan-to-value
Nothing on this page is a rate quote, an approval, or a commitment to lend. Figures and requirements change, and they depend on your file.
Bank statement compared with conventional, for self-employed borrowers
Conventional guidelines already have a method for self-employment income. The question is whether that method reflects what your business actually produces.
Income basis
- Bank statement loan
- Qualifying deposits over a defined period, less an expense factor that approximates business costs.
- Conventional
- Net income calculated from personal and business tax returns under agency guidelines.
Tax returns
- Bank statement loan
- Generally not used to calculate income.
- Conventional
- Required, usually with business returns as well.
The variable that moves the answer
- Bank statement loan
- The expense factor the lender applies. Some vary it by industry; some will lower it on a letter from your CPA or licensed tax preparer.
- Conventional
- The add-backs and deductions the guideline calculation allows.
When it helps
- Bank statement loan
- When write-offs reduce net income well below the cash the business generates.
- Conventional
- When the guideline calculation already supports the loan amount you need.
Pricing
- Bank statement loan
- Non-agency, and generally priced differently from conventional financing.
- Conventional
- Agency pricing.
What is still underwritten
- Bank statement loan
- Credit, reserves, the down payment, the property and the appraisal — all of it.
- Conventional
- The same, plus the full documentation set.
Test conventional first. It is the less expensive route when it works, and being self-employed does not disqualify you from it. Alternative documentation is the answer when the guideline calculation understates your income — not a default for anyone who owns a business.
Terms used on this page
- Asset depletion
- A qualifying method that converts eligible assets into a monthly income figure by dividing them over a number of months set by the lender.It does not mean the assets are spent or pledged. It is a calculation, and the eligible asset types and the number of months both vary by lender.
- Reserves
- Funds you still hold after closing, usually expressed as a number of months of housing payments, which a lender requires as a cushion.Funds counted as reserves generally cannot also be counted as qualifying income under an asset depletion calculation.
- Debt-to-income ratio (DTI)
- Your monthly debt obligations measured against your gross monthly income. Lenders use it to assess capacity to repay.
Questions about this program
- Do my retirement accounts count?
- Often, in part, and frequently at a discount. Some lenders restrict their use based on your age or the account type. It is specifically a lender-level rule.
- Can I use the same money for the down payment and for qualifying?
- Generally no. Funds needed for the down payment, closing costs and reserves are usually excluded from the depletion calculation, so plan for both.
Official sources
Program rules are set by these organizations and are updated periodically. Where this page and an official source disagree, the official source is correct.
- Explore loan options (opens in a new tab) — Consumer Financial Protection Bureau
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Talk it through before you start shopping
Bring your situation, not your paperwork. A first conversation is about which programs actually fit and what the numbers look like — no documents, no credit pull, no commitment.