Asset depletion loan vs. Conventional loan
A conventional loan wants income: wages, self-employment profit, pensions, distributions. An asset depletion program manufactures income from your balance sheet instead — dividing eligible liquid assets by a term (÷360 months is the common convention) and treating the result as monthly qualifying income, employment optional.
The trade is cost and haircuts. Non-QM asset depletion pricing runs above conventional, and not every dollar counts: cash typically counts fully, brokerage assets at a discount, retirement funds at a deeper discount (and sometimes only after 59½). Conventional guidelines do have their own, narrower asset-based mechanics — but the flexible, employment-free version lives in non-QM.
Side by side
| Factor | Asset depletion loan | Conventional loan |
|---|---|---|
| Qualifying income | Eligible assets ÷ 360 (some programs ÷ 120 or ÷ 84) | Documented employment/pension/investment income |
| Asset haircuts | Cash ~100%, stocks ~70–80%, retirement ~60–70% | Assets are reserves, not income (with narrow exceptions) |
| Employment required | No | Effectively yes (some income source) |
| Down payment | 20–30% typical | 3–20% |
| Rate vs. conventional | ~0.5–1.5% higher | Baseline |
| Best when | Large liquid portfolio, little taxable income | Steady documentable income exists |
Figures are representative ranges, not quotes, and vary by lender. Read the full guides: Asset depletion loan · Conventional loan.
Who should pick asset depletion loan
Retirees, recent business sellers, and investors whose statements show plenty of money but whose tax returns show little income — the classic asset-rich, income-light profile.
Who should pick conventional loan
Anyone with enough documentable income to pass conventional underwriting — the rate is lower, the down payment smaller, and assets can still help as reserves and compensating factors.
Bottom line
Still deciding? Take the 5-question loan quiz, compare every option on the loan types page, or size a purchase with the affordability calculator.
FAQ
Program-dependent. Many lenders discount retirement assets more heavily — or exclude them — when withdrawals would trigger penalties. After 59½, a common treatment is counting 60–70% of the balance. Ask each lender for their exact eligibility grid before comparing quotes.
No. Asset depletion is a mortgage qualified on a formula against assets you keep; pledged-asset structures collateralize the securities themselves. Depletion doesn't freeze or margin your portfolio — it just reads it as income capacity.
Educational information only — not financial advice, and not a quote, pre-approval, or offer of credit. Mortgage Merlin is a publisher, not a lender or broker.