Loan Programs · 7 min read
Asset Depletion Mortgage in California
An asset depletion mortgage lets you qualify using your liquid assets instead of employment income. The lender takes your eligible savings, brokerage, and retirement balances, applies a haircut, divides the total by a set number of months (commonly 60, 84, or 120), and treats the result as monthly qualifying income. A California retiree with 2,000,000 dollars in a brokerage account can show tens of thousands in monthly qualifying income without a single pay stub. It is a non-QM program, so terms and asset percentages vary by lender, and a broker who shops several of them usually lands the best structure.
What an Asset Depletion Mortgage Actually Is
An asset depletion mortgage, also called an asset-based or asset-utilization loan, converts a pile of liquid wealth into a monthly income figure a lender can underwrite. Instead of asking for two years of W-2s and recent pay stubs, the underwriter looks at how much money you hold in qualifying accounts and calculates what that balance could pay out over a defined period.
This matters in California, where many capable buyers have plenty of assets and very little conventional income. A retired physician in Newport Beach, a business owner who reinvests profits rather than paying herself a large salary, or a Marina del Rey investor living off a portfolio all run into the same wall with traditional financing: the paperwork does not reflect their true financial strength. Asset depletion closes that gap.
The loan is a non-QM (non-qualified mortgage) product. It sits outside the automated Fannie Mae and Freddie Mac boxes, which means each lender writes its own rules on which assets count, what percentage they credit, and how many months they divide by. There is no single national standard, so two lenders can quote very different qualifying income on the identical bank statement.
How the Calculation Works, With a Worked Example
The math is simpler than the name suggests. The lender totals your eligible assets, discounts certain account types with a haircut, then divides by a set number of months to reach monthly qualifying income. The divisor is the biggest lever: a 60-month divisor produces far more income than a 120-month divisor on the same balance.
Here is a clean example for a California borrower using a common structure.
- Checking and savings: 300,000 dollars, counted at 100 percent = 300,000
- Brokerage (stocks, bonds, mutual funds): 1,500,000 dollars, counted at 70 percent = 1,050,000
- Retirement account, borrower age 62 or older: 800,000 dollars, counted at 70 percent = 560,000
Total qualifying assets after haircuts: 1,910,000 dollars. Divide by an 84-month divisor and you get roughly 22,738 dollars in monthly qualifying income. Divide the same figure by 120 months and it drops to about 15,917 dollars. Nothing about the borrower changed; only the lender's divisor did. That is exactly why shopping the program matters.
Underwriters then run that qualifying income against the new housing payment and any other debts to check the debt-to-income ratio, just like a normal loan. The difference is only where the income number came from.
Which Assets Count, and at What Percentage
Not every dollar is treated equally. Cash-equivalent accounts usually count in full, market-exposed accounts get a haircut to account for volatility, and retirement funds are often discounted further or restricted by age because early withdrawals carry penalties. The table below shows a representative structure. Your actual numbers depend on the lender a broker matches you to.
| Asset type | Typical credited percentage | Notes |
|---|---|---|
| Checking and savings | 100 percent | Fully liquid, no market risk |
| Money market and CDs | 100 percent | Penalty for early CD withdrawal usually ignored |
| Stocks, bonds, mutual funds (non-retirement) | 70 to 80 percent | Haircut covers market volatility |
| Retirement accounts, borrower under 59 and a half | 0 to 60 percent | Many lenders exclude these entirely due to withdrawal penalties |
| Retirement accounts, borrower 59 and a half or older | 70 percent | Penalty-free access improves the credit |
| Crypto and privately held business equity | Usually 0 percent | Too illiquid or volatile to count |
Two rules show up almost everywhere. First, the assets generally must be yours and seasoned, meaning they have sat in your accounts for a couple of months rather than appearing days before application. Second, any funds needed for the down payment and closing costs are typically subtracted before the depletion calculation runs, because you cannot spend the same dollars twice.
Who the Program Fits
Asset depletion is built for borrowers whose balance sheet is strong but whose income documentation is thin. In California that describes a large and growing group.
Retirees. A couple living off a 3,000,000 dollar portfolio may take modest, irregular distributions that look small on a tax return. Asset depletion values the whole portfolio instead of the trickle they happen to withdraw.
High-net-worth buyers. Someone who sold a company or vested a large equity package might have seven figures in liquid accounts and little current W-2 income. The program lets that wealth do the qualifying.
Business owners. Entrepreneurs who leave profits inside the company, or whose tax returns show heavy write-downs, often understate their real capacity. If they also hold substantial personal reserves, asset depletion can be cleaner than wrestling with two years of complex returns. Where the strength is business cash flow rather than a lump of savings, a bank-statement loan may fit better, and a broker can compare the two.
Foreign nationals and trust beneficiaries. Buyers with California assets but nonstandard income streams frequently qualify here when agency loans will not consider them.
Typical Terms and Down Payment
Because asset depletion is a non-QM product, terms sit modestly above conventional pricing to reflect the added flexibility. Expect the following ranges in the 2026 California market, subject to your profile and the lender.
- Down payment: commonly 20 to 30 percent. Stronger reserves and credit can push toward the lower end.
- Loan amounts: these programs are popular for jumbo balances, and California prices make that the norm. Loans well into the millions are routine.
- Rates: typically a fraction to roughly a point above comparable conventional rates, varying with credit, leverage, and the divisor used.
- Credit: most lenders want a mid-score around 680 or higher, though some flex lower with a larger down payment.
- Structure: fixed and adjustable options exist, and many buyers pair asset depletion with an interest-only period to keep payments low relative to their wealth.
- Reserves: lenders often want the qualifying assets to remain largely intact after closing, not drained to fund the purchase.
One practical point for California buyers: some lenders let you combine asset depletion income with any actual income you do receive, such as Social Security, a pension, or part-time W-2 wages. Stacking the two can lift your qualifying income and expand your price range.
How a Broker Places an Asset Depletion Loan
This is where working with a broker rather than a single bank changes the outcome. Since every non-QM lender sets its own divisor and asset percentages, the same borrower can receive materially different qualifying income and pricing depending on where the file lands.
At Save Financial, the process runs roughly like this. First, we inventory your accounts and identify which balances are eligible and how each lender in our network would treat them. Second, we test the divisors, because a lender using 60 months instead of 120 can nearly double your qualifying income and may be the difference between approval and decline. Third, we structure the rest of the file, including down payment, reserves, and whether an interest-only feature helps. Finally, we place the loan with the lender whose combination of divisor, asset credit, rate, and guidelines produces the best real-world result for your purchase or refinance.
Save Financial is a California mortgage brokerage, not a bank (NMLS #377740, DRE #01875766), with offices in Newport Beach and Marina del Rey. Because we shop multiple non-QM investors rather than sell one menu, we can match your specific asset mix to the program that reads it most favorably. If you are asset-rich and income-light, that difference is worth real money.
About this article: Save Financial is a California-licensed mortgage brokerage (NMLS #377740, DRE #01875766) with offices in Newport Beach and Marina del Rey, serving all 58 counties. We shop multiple lenders to match you with the right program. For a real quote, apply online or call 949-379-5320.