ASSET DEPLETION LOANS
DESCRIPTION
ASSET DEPLETION LOANS;QUALIFY BASED ON ASSETS INSTEAD OF YOUR INCOME
Asset depletion income is a methodology employed by lenders to calculate a borrower's income using their liquid assets.
This method is particularly useful when the borrower's traditional income is insufficient or irregular, but they hold a significant amount of liquid assets, such as stocks.
Eligible assets generally include retirement accounts, investment accounts, and other readily accessible funds.
Below is a typical asset depletion formula, but may vary by lender
Determine the net documented assets. This is the total amount of eligible assets minus the following:
• The amount of any penalties that would apply if the assets were distributed early
• The amount of funds that will be used for down payment, closing costs, and required reserves
2. Divide the net documented assets by the amortization term of the mortgage loan (in months).
The resulting amount is the monthly asset depletion income.
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