What Is Asset Utilization and Asset Depletion? Qualifying on Wealth, Not Income
Not every borrower earns a regular paycheck. Retirees, high-net-worth individuals, and others who live off investments or savings may have substantial wealth but limited traditional income. Asset utilization — sometimes called asset depletion — is a Non-QM income method that converts liquid assets into qualifying income.
How It Works
The lender takes your eligible liquid assets, subtracts amounts needed for down payment, closing costs, and required reserves, and then divides the remaining balance by a set number of months — typically 84 months. The result is treated as your monthly qualifying income.
What Assets Count?
Not all assets are created equal. Lenders apply percentage factors to different asset types:
| Asset Type | Eligible Percentage |
|---|---|
| Checking / Savings / Money Market | 100% |
| Stocks, Bonds, Mutual Funds | 60–70% |
| Retirement Accounts (under 59½) | 60–70% |
| Retirement Accounts (59½ and older) | 70–80% |
| Cash Value of Life Insurance | 100% |
| Cryptocurrency (converted to cash) | Varies — must be seasoned |
What Assets Are NOT Eligible
- Business assets or funds held in a business name
- Foreign assets (on most programs)
- Gift funds
- Non-liquid assets (real estate, vehicles, artwork)
- Restricted or unvested stock
- Assets held in irrevocable trusts (borrower must have immediate access)
Program Requirements
Asset utilization programs require a minimum asset balance — generally the lesser of $1 million or 125% of the loan amount. Assets must be seasoned, typically for 90 to 120 days, and verified with the most recent two to six months of statements. Balances must be verified close to the note date.
This option is generally available on primary residences only on some programs, and is not permitted for cash-out refinances, investment properties, or second homes under certain guidelines. Always confirm eligibility with your loan officer.
Who This Is For
- Retirees with significant investment portfolios but limited W-2 income
- Individuals who sold a business or property and are living off the proceeds
- High-net-worth borrowers whose income doesn’t reflect their financial strength
- Borrowers who receive income from trusts or other sources not easily documentable in standard form
A second worked example (illustrative example, not a quote)
Suppose you hold $400,000 in savings and money market accounts, counted at 100%, and $600,000 in a brokerage account counted at 60% (the low end of the stated range), which is $360,000. Eligible assets total $760,000. If $160,000 is needed for the down payment, closing costs, and reserves, net eligible assets are $600,000. Dividing by 84 months gives about $7,143 per month of qualifying income. The minimum asset rule is the lesser of $1 million or 125% of the loan amount; on a $600,000 loan, 125% is $750,000, so $750,000 is the lesser.
Steps to prepare
- List every account, its type, and the statement balance.
- Apply each asset type’s percentage to see what actually counts.
- Subtract the cash you will use at closing.
- Leave funds in place for the seasoning period, typically 90 to 120 days, and avoid moving money between accounts.
- Ask for a scenario review before you sell or retitle any investments.
When this approach is and is not a good fit
It suits retirees and borrowers with substantial liquid wealth who would otherwise struggle to show income. It is a weaker fit when most of your wealth is in real estate or business interests, which do not count, or when you would be uncomfortable with the balance drop after using funds at closing. The method calculates income; it does not spend your assets.
Mistakes to avoid
- Moving funds between accounts during the seasoning period, which can complicate the seasoning review.
- Counting business-owned accounts or unvested stock, which do not qualify.
- Assuming the percentage for stocks is a fixed number; it varies by program.
Frequently asked questions
Can I combine asset income with a pension or Social Security?
Terms vary by program and borrower profile. We confirm whether other income can be added when we review your scenario.
Will I owe taxes if I sell investments to build cash?
Possibly. Consult a tax professional before selling or withdrawing from retirement accounts.
Do I have to keep the assets after closing?
The qualification relies on the assets being eligible and verified near the note date. Ask us what a program expects of the balances afterward.
Related guides
Key Takeaways
- Asset utilization converts liquid wealth into qualifying income — no employment required
- Net eligible assets are divided by 84 months to determine monthly income
- Checking, savings, and money market accounts count at 100%; other assets at lower percentages
- Generally restricted to primary residence; not available for cash-out or investment on most programs
- Assets must be seasoned and verified close to closing
- A $600,000 brokerage balance counted at 60% adds $360,000 of eligible assets in the example above (illustrative example)
- The minimum asset rule is the lesser of $1 million or 125% of the loan amount, so a $600,000 loan sets it at $750,000
- Hold funds in place for the seasoning period and ask before moving or selling investments
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