Short answer: Asset depletion (also called asset dissipation) mortgages let borrowers qualify using their liquid assets — savings, brokerage accounts, retirement accounts — instead of, or in addition to, traditional wage income. Fannie Mae Selling Guide B3-3.1-09 permits this on conforming loans using a specific formula. Non-QM programs offer more permissive versions. Common use cases: retirees, business owners between operating cycles, high-net-worth borrowers whose income comes from investments rather than wages, and borrowers who've had a liquidity event and are house-hunting between jobs. The math converts your asset balance into a monthly income figure the underwriter can use to qualify a mortgage payment.
The Core Idea.
Traditional mortgage underwriting asks: "Does the borrower earn enough monthly income to support the payment?" Asset depletion asks a slightly different question: "Does the borrower have enough monthly-equivalent assets to support the payment over the loan term?"
The math converts a lump-sum asset balance into a monthly income figure using a division formula. A $1,000,000 brokerage account divided over 360 months = $2,778/month of "qualifying income" for underwriting purposes. That doesn't mean the borrower is forced to actually withdraw $2,778/month — it just means the asset base is sufficient to theoretically support that payment for the full loan term.
Once converted to monthly income, the asset depletion figure is treated like any other qualifying income and gets added to any other income sources the borrower has (Social Security, pension, part-time W-2, business income, spousal income). The combined figure determines the maximum mortgage payment the borrower can carry per standard debt-to-income (DTI) ratios.
Three Different Formulas.
The math varies by program. The most common:
Fannie Mae B3-3.1-09 (Conforming).
Formula: Eligible net liquid assets ÷ 360 months = monthly qualifying income.
Eligible assets: checking, savings, brokerage (100% of value); vested retirement account balances at 70% for borrowers approaching retirement age or with penalty-free access (typically age 59½+); minus any assets committed to down payment and closing costs.
Example: $1,000,000 brokerage account + $500,000 IRA (borrower age 62). Down payment plus closing costs of $200,000 will come from the brokerage account. Eligible assets = $800,000 brokerage + ($500,000 × 70%) IRA = $1,150,000. Divided by 360 = $3,194/month qualifying income.
Freddie Mac (Conforming).
Formula: Eligible assets × 70% ÷ 240 months = monthly qualifying income.
Freddie's method is more generous in that it uses a shorter denominator (20 years instead of 30) but applies a 30% haircut to the base asset figure. The two approaches produce different qualifying figures for the same asset base, so shopping between Fannie and Freddie can materially change the outcome.
Non-QM Asset-Based Programs.
Various formulas depending on the lender/investor. Common variations:
- 84 months (7 years) division — very aggressive; some Angel Oak, Deephaven, and similar non-QM investors offer this for borrowers with strong asset bases
- 120 months (10 years) — mid-range non-QM standard
- Retirement accounts at 100% for borrowers with penalty-free access
- Some programs allow 100% of investment property equity as an eligible asset
Non-QM asset-based rates typically run 0.75-1.5% higher than conforming, but the qualifying income differences can be substantial. Same $1,000,000 in liquid assets produces:
- Fannie Mae (360 months): $2,778/month qualifying
- Freddie Mac (70% × 240 months): $2,917/month qualifying
- Non-QM 120 months: $8,333/month qualifying
- Non-QM 84 months: $11,905/month qualifying
Who Uses Asset Depletion.
Retirees. The single largest user group. A retired couple with $2,000,000 in a mix of taxable and retirement accounts plus $50,000/year in Social Security can comfortably qualify for a $600K-$800K purchase using asset depletion combined with SS income.
Between-jobs high-net-worth borrowers. A tech executive who sold a startup and is taking a year off before her next role has substantial liquidity but no current W-2 income. Asset depletion converts the sale proceeds into qualifying income immediately, so she can buy a home now rather than waiting for her next job to establish a 30-day paystub history.
Business owners between operating cycles. A restaurant owner between locations, a developer between projects, a consultant with lumpy 1099 income — asset depletion can supplement inconsistent business income to smooth qualification.
Trust beneficiaries. Borrowers receiving trust distributions where the trust corpus is substantial but the annual income is modest.
Business owners taking dividends over salary. High-net-worth business owners who legitimately structure their compensation as dividends or K-1 distributions (rather than W-2 wages) often show lower "income" on tax returns than their actual cash flow. Asset depletion supplements this to reflect real financial capacity.
Firefighters and public safety approaching retirement. Officers with substantial DROP accumulations or 457(b) balances approaching retirement can use asset depletion to bridge from the working years into the retirement years, especially for a downsize or relocation purchase.
Which Assets Qualify.
Generally qualifying:
- Cash in checking, savings, money market accounts
- CDs — regardless of maturity (some lenders require penalty documentation)
- Brokerage account balances — stocks, bonds, mutual funds, ETFs (typically at 100% of value)
- Retirement accounts — 401(k), Traditional IRA, Roth IRA, SEP IRA (typically at 60-70% for borrowers under 59½; often 100% at 59½+ with penalty-free access)
- Vested employer stock — with 60-70% haircut typical
- Restricted stock (RSUs) — only the vested portion; typically at 60-70% of current market value
Generally not qualifying:
- Primary residence equity (can't be used because you're keeping the home)
- Business inventory or working capital
- Whole life insurance cash value (some programs allow at reduced factor)
- Assets already committed to down payment and closing costs
- Non-liquid business interests (private company shares, LLC partnership interests)
- Cryptocurrency (some non-QM programs allow at 40-60% factor; conforming does not)
The Documentation Package.
Standard package for an asset depletion file:
- 2 months of statements for every asset account being counted — checking, savings, brokerage, retirement, CDs
- Written explanation for any large deposits or transfers in the trailing 60 days (typically anything above $500-$1,000 depending on lender)
- 2 years of personal tax returns — used to verify no undisclosed income sources and confirm any reported investment income
- Photo ID
- Purchase contract, insurance quote, HOA documents — standard property documentation
- For retirement accounts: documentation of unrestricted access (age 59½+ confirmed, separation from service documentation for prior 401(k)s, evidence of no early-withdrawal penalty)
- For business owners: 2 years of business tax returns (1120, 1120S, 1065) and current YTD P&L
Real Example: Retired Firefighter Downsize.
Consider a retired firefighter, 68 years old, with a spouse. Selling a paid-off larger home in North Miami and downsizing to a $475,000 condo in Boca Raton:
- Social Security (both spouses): $46,000/year
- Firefighter pension: $58,000/year
- Traditional IRA (borrower): $620,000
- Brokerage account (joint): $340,000
- Sale proceeds from prior home (after paying off nothing): $475,000 — half used as down payment on new condo, half to reserves
File structure using Fannie Mae B3-3.1-09:
- Down payment on new condo: $237,500 (from sale proceeds)
- Eligible remaining assets: $237,500 sale proceeds + $340,000 brokerage + ($620,000 × 70%) IRA = $1,011,500
- Monthly asset depletion income: $1,011,500 ÷ 360 = $2,810/month = $33,720/year
- Total qualifying income: $46,000 Social Security (grossed up 25% = $57,500) + $58,000 pension + $33,720 asset depletion = $149,220
On a $237,500 loan for the $475,000 condo (50% down), this couple qualifies comfortably. The condo purchase becomes a monthly payment of roughly $1,700 including HOA, taxes, insurance — well within their DTI ceiling. Without asset depletion in the calculation, Social Security + pension alone at $115,500 grossed up would still qualify — but many retirees find that asset depletion provides the qualifying margin that makes the file approved-with-comfort rather than approved-with-anxiety.
Real Example: Between-Jobs Executive.
Consider a 45-year-old software executive who sold her startup 8 months ago for $4.8M net after tax, is taking a 12-month sabbatical, and wants to buy a $1.6M primary residence in the Denver area before her next role starts:
- Current W-2 income: $0 (severance ended)
- Liquid assets: $4,800,000 in a diversified brokerage account
- Retirement: $850,000 in 401(k) (below 59½ so 60% haircut applies)
Standard conforming path: Fannie Mae B3-3.1-09. Down payment $320,000 (20%). Eligible remaining assets: $4,480,000 brokerage + ($850,000 × 60%) 401(k) = $4,990,000. Monthly asset depletion: $4,990,000 ÷ 360 = $13,861/month = $166,332/year of qualifying income.
On a $1,280,000 loan at 6.5%, the monthly principal + interest would be roughly $8,090/month. Plus taxes/insurance/HOA of ~$1,900. Total housing payment ~$10,000. Against qualifying income of $166,332/year ($13,861/month), that's a housing DTI of about 72% — too high for standard conforming (43% ideal max).
Solution: Non-QM asset-based program at 120-month depletion. Same assets divided by 120 = $41,583/month qualifying income. Housing DTI drops to 24%. Approval clean. Rate ~1% higher than conforming, but the borrower gets the home and can refinance to conforming after establishing new W-2 employment.
When Asset Depletion Isn't The Right Answer.
You have plenty of traditional income. If your W-2 income already qualifies you for the target home, asset depletion adds nothing — just adds documentation complexity. Standard conforming underwriting is faster and cheaper.
Your assets are illiquid. Rental property equity, private business ownership, restricted stock that isn't vested — these don't qualify for asset depletion. If your "wealth" is on paper rather than in a brokerage account, asset depletion may not help.
You're relying on retirement accounts under 59½. The 60-70% haircut and stricter documentation reduce the qualifying figure substantially. For borrowers still years from retirement age, the math sometimes doesn't produce enough qualifying income to be worth the trouble.
You need FHA or VA financing. FHA and VA don't formally offer asset depletion the way conventional does. VA underwriters can consider "residual income" from assets in some scenarios but it's a smaller factor.
Combining With Other Income Sources.
Asset depletion isn't either/or. It adds to whatever other qualifying income you have:
- Social Security (grossed up 25% for non-taxable portion) + asset depletion
- Pension (typically taxable, so no gross-up) + asset depletion
- Part-time W-2 income + asset depletion
- Investment interest and dividend income + asset depletion (careful not to double-count the underlying assets)
- Spousal wage income + asset depletion
The lender combines all qualifying income streams into a single figure and runs the standard DTI calculation against it.
Rate And Fee Considerations.
Conforming asset depletion (Fannie/Freddie): same rate as any other conforming loan. No premium for using B3-3.1-09.
Non-QM asset-based: typically 0.75-1.5% higher rate than conforming, plus origination fees that can run 1-2% depending on program. Higher down payment requirements (often 20-25% minimum).
Documentation cost: asset depletion files require more documentation review than standard W-2 files, so some lenders charge marginally higher processing fees. Generally a few hundred dollars, not thousands.
FAQ.
Can I get a mortgage using my assets instead of income?
Yes. Asset depletion (also called asset dissipation) mortgages convert your liquid assets into qualifying income. Fannie Mae Selling Guide B3-3.1-09 permits this for high-net-worth borrowers on conforming loans, using a formula that spreads assets over the loan term. Non-QM asset-based programs offer more flexibility with different formulas. Common use cases: retirees, business owners between operating cycles, borrowers who've had a liquidity event, or high-net-worth individuals whose primary income is investment returns rather than wages.
How does the asset depletion formula work?
Fannie Mae's method (B3-3.1-09): eligible net liquid assets are divided by 360 months (30 years) to produce a monthly qualifying income figure. Freddie Mac's method: eligible assets multiplied by 70% and divided by 240 months (20 years). Non-QM programs vary widely — some use 84 months (7 years), some 120 months, some allow up to 100% of retirement assets after age 59½. On $1,000,000 in eligible assets, Fannie's math produces $2,778/month of qualifying income; a non-QM 120-month program could produce over $8,300/month.
Which assets count for asset depletion mortgages?
Depends on the program. Generally qualifying: cash in checking and savings, brokerage accounts (stocks, bonds, mutual funds), CDs, and — with age or program-specific rules — retirement accounts (401(k), Traditional IRA, Roth IRA). Generally not qualifying: primary residence equity, business inventory, life insurance cash value (typically), assets already committed to the purchase's down payment and closing costs. The down-payment portion is subtracted from eligible assets before the depletion formula runs.
Do I need to have zero income to use asset depletion?
No. Asset depletion income is added to any other qualifying income you have (Social Security, pension, part-time W-2, business income). A retiree with $60,000/year in Social Security and pension plus $1,000,000 in a brokerage account could qualify with roughly $60,000 + $33,336 (Fannie asset depletion) = $93,336/year of qualifying income — often enough for a home purchase in the $500K-$700K range.
Are asset depletion mortgages more expensive than regular mortgages?
Depends on whether the file fits conforming (Fannie/Freddie) or requires non-QM. Fannie Mae's B3-3.1-09 asset depletion is a conforming loan program at conforming rates — same rate as a W-2 borrower would receive. Non-QM asset-based programs typically charge 0.75-1.5% higher interest rates because the underwriting is more permissive. For borrowers who fit conforming asset depletion, this is often the least-expensive path to homeownership without a W-2 job.
What documents do I need for an asset depletion mortgage?
Standard package includes: 2 months of statements for every asset account being counted (checking, savings, brokerage, retirement), a written explanation of any large deposits or transfers in the trailing 60 days, 2 years of tax returns (used to verify no undisclosed income sources), photo ID, and property-specific documentation (purchase contract, homeowners insurance quote). If retirement account funds are being counted, additional documentation of unrestricted access (age 59½+ or documented ability to withdraw without penalty) is typically required.
Sources & Primary References.
- Fannie Mae Selling Guide B3-3.1-09 — Other Sources of Income (asset dissipation / employment-related assets)
- Freddie Mac Single-Family Seller/Servicer Guide Section 5307 — Assets as a basis for repayment
- Fannie Mae Selling Guide B3-3.1-01 — General Income Information (combining income sources)
- Non-QM asset-based programs are lender-specific — terms vary between Angel Oak, Deephaven, AmWest, and similar Non-QM investors