An Asset Depletion Loan Program (also known as an asset-based or asset dissipation loan) is a non-qualified mortgage (non-QM) that allows borrowers to qualify for a home loan using their liquid assets rather than traditional income sources like W-2s, pay stubs, or tax returns. This program is designed for individuals with substantial assets but limited or irregular income, such as retirees, self-employed borrowers, or high-net-worth individuals.
Income Calculation: Lenders calculate a theoretical monthly "income" by dividing the borrower’s total qualifying liquid assets by a set period, typically 60–360 months (5–30 years), depending on the lender. For example, $1,000,000 in assets divided by 360 months equals ~$2,778/month in qualifying income.
Eligible Assets:
- 100% of cash, checking, savings, or money market accounts.
- 70–80% of stocks, bonds, or mutual funds.
- 50–70% of retirement accounts (e.g., 401(k), IRA), depending on the borrower’s age (often 100% if 59.5 or older, 50% if younger due to withdrawal penalties).
- Ineligible assets: Non-liquid assets like real estate, cars, art, annuities, or private investments.
Eligibility:
- Significant liquid assets (often $500,000+ required).
- Credit score typically 620–700+ (some lenders accept as low as 600).
- Down payment of 20–30% (some offer up to 90% LTV with no PMI).
- Debt-to-income (DTI) ratio usually below 50%.
- No employment or income verification required.
