Asset Depletion Mortgages: How Your Assets May Help You Qualify for a Home Loan
Not everyone earns income through a traditional W-2 paycheck.
Some people are retired. Others own businesses or rely heavily on investments. In many cases, a large portion of their wealth may be sitting in retirement accounts, savings, brokerage accounts, or other assets.
If that sounds familiar, don’t assume you can’t qualify for a mortgage.
In fact, asset depletion mortgage programs may allow us to use certain assets as income to help you qualify for a home loan.
What Is an Asset Depletion Mortgage?
Asset depletion is a way of calculating qualifying income based on assets you already have.
Rather than relying entirely on a salary, some lender guidelines allow qualifying assets to be converted into a monthly income amount for mortgage qualification.
For example, you may have substantial savings and investments even though your tax returns or paychecks do not show a large amount of traditional monthly income.
As a result, asset depletion can create financing options that many borrowers do not realize are available.
What Assets Can Be Used for Asset Depletion?
Depending on the loan program and your individual situation, qualifying assets may include:
- Checking and savings accounts
- Investment and brokerage accounts
- Stocks and bonds
- Retirement accounts
- Certain cryptocurrency assets
- Other eligible liquid assets
Of course, not every asset is treated the same way. However, significant savings or investments can sometimes make a major difference when determining whether you qualify.
Therefore, it is worth looking at your complete financial picture before assuming that limited traditional income automatically prevents you from buying a home.
Who Is Asset Depletion Good For?
Asset depletion can be especially helpful for people who are financially strong but do not fit neatly into the traditional income box.
For instance, it may be worth exploring if you are:
- Retired or approaching retirement
- A business owner
- Self-employed
- An investor
- Living primarily from investments
- Cash rich but showing limited taxable income
- Someone without a traditional W-2 job
Many people in these situations have built substantial wealth while intentionally keeping their taxable income relatively low.
Because of that, a traditional income calculation may not tell the full story.
Asset depletion gives us another way to evaluate your ability to qualify.
You May Not Need to Liquidate Everything
Another common misconception is that you have to sell your investments or drain your retirement account before those assets can help you qualify.
Fortunately, that is not the case.
Depending on the program, the assets may simply be used as part of the qualification calculation.
In other words, you may be able to demonstrate your financial strength without converting your entire investment portfolio into cash.
Traditional Income Isn’t the Only Way to Qualify
Mortgage qualification is not always as simple as looking at your paycheck.
For some borrowers, a traditional conventional mortgage works perfectly. On the other hand, alternative income strategies may make more sense for someone whose wealth is structured differently.
Asset depletion is one of those strategies.
Ultimately, the goal is to look at your complete financial picture instead of assuming you do not qualify simply because your income does not come from a normal salary.
Have Assets but Not Traditional Income? Let’s Look at Your Options.
If you have money sitting in savings, investments, retirement accounts, crypto, or other qualifying assets, you may have more mortgage options than you realize.
More importantly, don’t count yourself out just because your income doesn’t fit inside the traditional box.
Before you assume you cannot buy a home, let’s look at what you have available and determine whether an asset depletion mortgage or another financing strategy could work for you.
Contact Houzd Mortgage today and let’s run the numbers.