Most people assume qualifying for a mortgage is simple: you show your income, a lender checks your debt-to-income ratio, and you either qualify or you don't. For a lot of buyers that's true. But income isn't the only path to qualification.
If you have significant assets, whether that's a brokerage account, retirement savings, or other liquid holdings, there's a method called asset depletion that lets you use those assets to supplement or replace traditional income on a mortgage application.
How it works
The formula is straightforward. A lender takes your eligible assets, subtracts the down payment and closing costs, and then divides what's left over a set number of months (typically the loan term). That monthly figure gets counted as qualifying income.
So if you have $900,000 in eligible assets after your down payment, dividing by 360 months gives you $2,500 per month in qualifying income. Depending on which loan program is being used, the divisor can be as low as 240 months, which pushes that same $900,000 to $3,750 per month. It doesn't mean you're spending that money. It's just a formula used to demonstrate you have the financial depth to support the loan.
Who it's actually useful for
Asset depletion isn't a niche workaround. It comes up more often than people expect. Here are a few scenarios where it makes a real difference:
Retired before traditional pension age, so there's no W-2. Strong investment portfolio but limited monthly income on paper. Asset depletion fills the gap.
Owns multiple rentals and wants to stay within conforming loan limits. Using stocks or liquid assets to supplement rental income can strengthen the application without changing the loan structure.
Takes a modest salary on paper but has significant personal assets. Traditional income documentation understates the full picture. Asset depletion helps tell a more accurate story.
Has the wealth to buy outright but prefers to finance and keep assets invested. Asset depletion supports qualification while preserving liquidity.
A few things worth knowing
Not all assets count equally. Retirement accounts like IRAs and 401(k)s are typically discounted, often by 30%, to account for early withdrawal penalties and taxes. Liquid accounts like brokerage accounts usually count at full value. The specific rules vary by loan type and lender.
It also works best when combined with other income, not necessarily as a standalone qualifier. If you have some employment income and a strong asset base, the combination can open up better rates and terms than either would alone.
The bigger picture
Asset depletion is one of those tools that a lot of buyers don't know exists until someone shows it to them. If your financial picture is more complex than a straightforward W-2, it's worth having a conversation about whether your full financial profile is being considered, not just the income line.
Have assets but not sure how they factor into qualifying? Let's talk through your situation and figure out what actually applies to you.