The “no income” borrower isn’t always a dead deal
A client with savings but no W-2 income isn’t automatically a dead deal. Asset depletion loans turn a balance sheet into qualifying income — here’s how the math works and who it fits.
There’s a mortgage product that doesn’t get enough airtime in conversations with clients who are retired, semi-retired, or living off investments: asset depletion loans, sometimes called asset utilization loans.
How it works
The concept is straightforward. Instead of qualifying based on W-2 income or tax returns, lenders calculate a theoretical monthly income by dividing the borrower’s total liquid assets by a set number of months. The standard formula: total eligible assets, minus down payment and closing costs, divided by the depletion period — typically 60 to 84 months for non-QM lenders. A borrower with $900,000 in eligible assets putting $200,000 down would have $700,000 remaining, which divided by 60 months equals $11,667 in monthly qualifying income.
Eligible assets typically include retirement accounts, investment accounts, brokerage accounts, and trust accounts. The calculated income figure then runs through a standard debt-to-income analysis like any other loan.
The tradeoffs
Interest rates on asset depletion loans generally run higher than conventional — roughly 6% to 7.5% versus 5% to 6% on traditional mortgages, and most programs require a minimum FICO score around 700. These are non-QM products, meaning they sit outside standard Fannie/Freddie guidelines, so terms vary by lender.
Who it fits
The client profile this fits: retirees with substantial savings, business owners post-exit, or anyone who has spent years building wealth that shows up on a balance sheet rather than a pay stub. If a buyer tells you they don’t have the income to qualify, ask about their assets before ending the conversation.