Arizona Asset Depletion Mortgage: Qualify Using Your Portfolio, Not a Paycheck
If you have a $1M IRA but no W-2 income, a traditional lender will likely decline you. That's not because you can't afford the house — it's because their software doesn't know what to do with an investment portfolio. Asset depletion mortgages were built for exactly this situation: retirees, business owners who recently sold, and anyone sitting on substantial liquid assets but showing little on paper.
What is an asset depletion mortgage?
An asset depletion mortgage — sometimes called asset dissipation — is a Non-QM loan program that converts your liquid assets into a theoretical monthly income figure. You don't need a paycheck. You don't need a tax return. You need a large enough pile of money in the right accounts.
The qualifying logic is straightforward: if you had to draw down your savings over 30 years to pay a mortgage, how much could you pull each month? The lender answers that question mathematically and uses the result as your income.
How the formula works
Most programs follow a version of the Fannie Mae asset depletion guidelines, though Non-QM lenders may apply their own variations:
- Add up all eligible liquid assets (checking, savings, brokerage, retirement at discounted value).
- Subtract the down payment and estimated closing costs you're bringing to closing.
- Divide the remainder by the loan term in months (360 for a 30-year mortgage).
- The result is your qualifying monthly income.
| Step | Amount |
|---|---|
| Total eligible liquid assets | $900,000 |
| Less 10% down payment ($75,000) | ($75,000) |
| Less estimated closing costs | ($15,000) |
| Remaining eligible assets | $810,000 |
| ÷ 360 months (30-year term) | |
| Qualifying monthly income | $2,250/month |
Illustrative only. Actual eligible assets depend on account type and lender-specific discounting. Program guidelines vary by investor and are subject to change.
That $2,250 in calculated income then goes through normal debt-to-income analysis, just like W-2 income would. If you have other income (Social Security, a pension, rental income), the lender adds that on top before running the DTI calculation.
Who qualifies for an asset depletion mortgage in Arizona?
This program is designed for a specific type of borrower. It's not a general-purpose Non-QM product for active business owners (that's usually a bank statement loan). Asset depletion fits situations where income is genuinely low or absent but wealth is substantial.
Best-fit borrower profiles
- Retirees with IRA or brokerage accounts who receive Social Security or pension but not enough to qualify on their own.
- Sold-business owners who just received a large liquidity event. The tax return shows irregular or minimal current income even though the bank account looks very different.
- High-net-worth borrowers who deliberately keep W-2 income low for tax planning and live off investment returns.
- Between-career professionals who left a job, hold substantial savings, and haven't started their next chapter yet.
Typical qualification requirements
These are representative guidelines. Not all lenders match on every point, and exceptions exist on both sides. Mike reviews the actual investor matrix for your file.
| Factor | Typical requirement |
|---|---|
| Credit score (FICO) | 720 or higher on most programs; some allow 700+ |
| Down payment | 20% minimum; 25–30% for larger loans or weaker profiles |
| Reserves after closing | 12 months of PITIA (principal, interest, taxes, insurance, and HOA if applicable) |
| Asset seasoning | Funds in US financial institution accounts for 60–90 days minimum |
| Employment history | None required if qualifying on assets alone |
| DTI (debt-to-income) | 43–50% on calculated income; some investors more flexible |
| Property types | Primary residence, second home; investment property case-by-case |
| Loan amounts | Typically up to $3M; jumbo cases reviewed individually |
This is not a commitment to lend. Exact requirements depend on the specific lender, loan amount, and property. Don't self-disqualify on a single factor — call and we'll pull the right matrix for your scenario.
Which assets count — and which don't?
Not every dollar on your net-worth statement qualifies. Lenders look for liquid, accessible, US-held assets. Real estate equity, locked-up business interests, and unvested benefits don't count because they can't realistically convert to mortgage payments.
| Asset type | Eligible? | Typical credit amount |
|---|---|---|
| Checking and savings accounts | Yes | 100% of balance |
| Money market accounts | Yes | 100% of balance |
| CDs (certificates of deposit) | Yes, if accessible | 100% if no early-withdrawal penalty; reduced otherwise |
| Brokerage accounts (stocks, bonds, mutual funds, ETFs) | Yes | 70% of current market value (to account for market fluctuation) |
| IRA, 401(k), Roth IRA (age 59.5+) | Yes | 70% of vested balance on most programs |
| IRA, 401(k) (under age 59.5) | Yes, with larger haircut | 60% or less; lender accounts for early-withdrawal penalty |
| Vested stock options (publicly traded) | Often yes | Varies; case-by-case |
| Real estate equity | No | Not eligible unless property is sold and proceeds are in a liquid account |
| Business assets / business bank accounts | No (personal assets only) | Not eligible unless 100% ownership documented and lender approves |
| Non-vested stock options or restricted stock units | No | Not eligible until vested |
| Life insurance cash value | Rarely | Some lenders allow 70% of cash value; most exclude |
| Cryptocurrency | No | Not accepted on most programs as of 2026 |
Asset eligibility rules are set by the individual lender, not a universal standard. The above reflects common 2026 Non-QM program parameters. Verify with Mike before counting on a specific account type.
Asset depletion vs. bank statement loan vs. DSCR: when to use each
Three common Non-QM paths — and three very different borrower situations. If you're not sure which fits you, this table should help narrow it down. If your situation spans two columns, that's fine too; many files blend qualifying methods.
| Factor | Asset Depletion | Bank Statement | DSCR |
|---|---|---|---|
| How income is calculated | Assets ÷ 360 months = monthly income | 12–24 months of deposits × expense factor | Property rental income covers the mortgage payment |
| Who it's built for | Retirees, sold-business owners, high-NW borrowers with low or zero current income | Active self-employed with real cash flow that doesn't show on tax returns | Investors buying or refinancing income-producing rental properties |
| Tax returns required? | No | No | No |
| Active business income needed? | No | Yes (deposits must be documentable) | No (property cash flow is the qualifier) |
| Typical FICO floor | 720+ | 620–660+ | 640–680+ |
| Typical min down payment | 20–25% | 10–20% | 20–25% |
| Property type | Primary, second home, sometimes investment | Primary, second home, investment | Investment / non-owner-occupied only (most programs) |
| Can you combine with other income? | Yes — asset income supplements W-2, rental, Social Security | Yes — often blended with a co-borrower's W-2 | Not applicable — property covers its own payment |
Illustrative comparison. Specific guidelines vary by lender and loan file. Ask Mike which path applies to your situation.
For the full Non-QM program comparison, see the programs overview page. To compare asset depletion with the asset qualifier (which uses assets to cover the full loan cost, not calculate income), read the asset qualifier guide.
Real Arizona example: Phoenix retiree buying a Scottsdale condo
Here's how the numbers actually work on a common Arizona scenario. This is an illustrative example; real files vary by lender guidelines and individual borrower details.
The borrower: A 68-year-old retired attorney in Phoenix. $1.2M in a traditional IRA. Social Security income of $2,100/month. No W-2, no business income. She wants to buy a $600,000 condo in north Scottsdale.
Why the traditional path fails her
A conventional conforming loan applies the standard income test. Social Security alone ($2,100/month) produces a qualifying income that supports roughly $280,000 in mortgage debt at typical 2026 pricing. For a $480,000 mortgage on the $600K condo, she's roughly $50,000 short of what conventional underwriting needs to see in monthly income. The IRA exists, but a conventional lender can't use it in the way that actually helps.
The asset depletion calculation
| Step | Amount |
|---|---|
| IRA balance (at 70% for age 59.5+) | $840,000 |
| Less 20% down payment ($120,000) | ($120,000) |
| Less estimated closing costs and reserves | ($60,000) |
| Eligible assets for depletion calculation | $660,000 |
| ÷ 360 months | |
| Asset depletion monthly income | $1,833/month |
| Social Security income | $2,100/month |
| Total qualifying monthly income | $3,933/month |
At $3,933/month qualifying income and a 43% DTI limit, this borrower can support roughly $1,690 in total monthly debt payments. On a $480,000 mortgage, a 30-year loan at typical 2026 Non-QM pricing produces a principal-and-interest payment in the $3,100–$3,400 range when taxes, insurance, and HOA are added. Mike would run the full scenario on the call and identify whether a different loan amount, larger down payment, or additional reserves open up better pricing tiers.
The key point: without asset depletion, this borrower doesn't qualify. With it, she has a clear path to the property she wants.
How to get started with an asset depletion mortgage in Arizona
The process is similar to any mortgage, with a few extra steps on the asset documentation side. Here's what to expect:
- Gather your asset statements. Two most-recent monthly (or quarterly) statements for every account you plan to use. Statements must show the account holder name, institution name, account number, and current balance.
- Confirm seasoning. Assets need to have been in your name for at least 60–90 days at most institutions. Large recent deposits or transfers may require sourcing documentation.
- Document other income sources. If you receive Social Security, pension, or rental income, gather the current award letter or lease agreements. Every dollar helps the qualifying calculation.
- Pull credit. Mike runs a soft pull first to confirm you're in the FICO range (720+) before ordering a hard inquiry.
- Model the numbers. Mike runs your assets through the actual investor matrices to determine which program fits best and what loan amounts and payment ranges are realistic for your asset pool.
- Submit and close. Non-QM underwriting typically takes 30–45 days. Asset qualifier files can move faster because there's no income calculation — only an asset coverage check.
No obligation to commit at any stage. The consult is free and the modeling takes about 20 minutes on the phone.
For additional background, read the asset depletion loan Arizona overview on the blog, or see how the related asset utilization program works if you also have some ongoing business income.
Common questions about Arizona asset depletion mortgages
What is an asset depletion mortgage?
An asset depletion mortgage (also called asset dissipation) is a Non-QM loan that converts your liquid assets into a calculated monthly income figure. Instead of pay stubs or tax returns, the lender takes your eligible assets, subtracts your down payment, and divides the remainder over a set number of months (typically 360) to arrive at qualifying income. Not all lenders offer this program.
How much in assets do I need to qualify?
It depends on the purchase price and your other income sources. A rough starting point: take the mortgage loan amount, figure out the monthly payment, then work backward. At a 43% DTI, your qualifying income needs to cover that payment plus any other monthly debts. The asset depletion formula divides eligible assets by 360 to get monthly income. We model the real numbers during the consult.
Do retirement accounts count toward asset depletion?
Yes. IRAs and 401(k)s count, but with a discount applied. Most programs credit 70% of the vested balance for borrowers age 59.5 or older. Under 59.5, the discount is larger (60% or less) to reflect potential early-withdrawal penalties. Only the vested, accessible portion counts. An IRA that is still locked in an employer plan may not count until it's rolled over.
Is an asset depletion loan the same as a bank statement loan?
No. A bank statement loan documents real deposit history over 12 or 24 months to prove ongoing income. Asset depletion calculates a theoretical monthly income from your savings or portfolio — so it works even if you have zero current income. Bank statement is better for active self-employed borrowers. Asset depletion is better for retirees or anyone who recently sold a business and is living off savings.
Can I combine asset depletion income with W-2 or rental income?
Yes. Asset depletion income adds to whatever else you have. Social Security, pension, part-time W-2, rental income — the lender stacks it all together before running DTI. Many Arizona retiree files do exactly this: Social Security covers part of the qualifying number and the IRA depletion formula covers the rest.
Will the lender require me to liquidate the assets?
No. The assets stay in your accounts. Liquidation is only required for the down payment, closing costs, and required reserves. The asset depletion formula is a qualifying calculation, not a draw schedule. You don't send the lender your IRA or hand over any investment account.
Do Arizona retirees commonly use asset depletion mortgages?
Yes. It's one of the primary tools for retired buyers in Scottsdale, Paradise Valley, and the East Valley purchasing primary residences or second homes. The typical profile is someone with $800,000 to $2M in retirement or brokerage accounts, Social Security or pension income, and a purchase price in the $500,000 to $1M range. The asset depletion formula bridges the gap between what traditional underwriting allows and what the buyer can actually afford.
Is an asset depletion loan a Non-QM product?
Yes. Asset depletion is a Non-QM (Non-Qualified Mortgage) product. It follows ATR (Ability to Repay) standards but uses alternative income documentation rather than the standard W-2 and tax-return path. Non-QM loans are first mortgages from federally regulated lenders — legitimate, fully documented, and reported to credit bureaus. They just use different qualifying rules. Not all lenders offer asset depletion; Cornerstone First Mortgage has access to these programs.
Ready to see what your assets support?
Start the application or book a 20-minute call. Mike will run the depletion formula for your actual account balances and tell you what loan amount is realistic — before you spend time with any bank that doesn't know what to do with your IRA.