Asset depletion loan Arizona — using portfolio income to qualify
Asset depletion loans let AZ buyers qualify for mortgages based on their investment portfolio, not their income. Useful for retirees, business sale beneficiaries, and high-net-worth-low-income buyers.
How asset depletion works
Instead of using your monthly income to qualify, the lender calculates "depletion income" based on your liquid assets. The formula typically:
(Total liquid assets ÷ months) = qualifying monthly income
Different programs use different denominators:
- 360 months (30 years) — most generous; produces highest qualifying income
- 240 months (20 years) — moderate
- 120 months (10 years) — most conservative
What counts as liquid assets
- Cash + savings accounts
- Money market accounts
- CDs (some discount applied if early withdrawal penalty)
- Brokerage accounts (stocks, bonds, ETFs)
- IRAs + 401(k) (50-70% of balance typically used, depending on age + access)
- Annuities (case-by-case)
What doesn't typically count
- Real estate equity (not liquid)
- Privately held business equity
- Personal property (cars, jewelry)
- Cryptocurrency (some programs accept, with substantial discount)
Real example — AZ retiring high-net-worth buyer
Recently retired AZ buyer, age 62, $1.8M in brokerage accounts + $400K in IRA, $35K/year pension. Buying $850K Sedona home.
Traditional underwriting
- Qualifying income: $35K/year pension + maybe $10K Social Security = $45K/year = $3,750/month
- Max PITI at 41% DTI: $1,540/month
- Affordable home price: ~$235K (well below target)
Asset depletion at 360 months
- Liquid assets: $1.8M (brokerage) + $280K (70% of IRA) = $2.08M
- Depletion income: $2.08M / 360 = $5,778/month
- Plus pension + Social Security: $5,778 + $3,750 = $9,528/month qualifying income
- Max PITI at 41% DTI: $3,906/month
- Affordable home price: $635K (still below target)
Asset depletion at 240 months
- Depletion income: $2.08M / 240 = $8,667/month
- Plus other income: $12,417/month qualifying
- Max PITI at 41% DTI: $5,091/month
- Affordable home price: $850K+ (target achieved)
Different programs unlock different price points.
Asset depletion vs other options for high-net-worth AZ buyers
vs traditional jumbo
Traditional jumbo requires high income. Doesn't work for retirees with substantial assets but limited income.
vs portfolio loan
Some banks offer "portfolio loans" against your existing investment accounts. Similar concept but different structure — your investments collateralize the loan rather than being depleted on paper.
vs asset-based loan
Asset-based loans pledge specific assets. Asset depletion uses the assets to calculate income but doesn't pledge them. Borrower retains full access.
Typical 2026 asset depletion loan terms
- Down payment: 20-30% typical (sometimes lower with strong assets)
- Credit minimum: 680-720 FICO
- Rate vs conventional: +0.5-1.0% (specialty product premium)
- Loan amounts: $300K to $5M+
- Cash reserves required: 12+ months PITI typical
Best AZ scenarios for asset depletion
- Recently retired vets/professionals with substantial 401(k)/IRA + lower current income
- Business owners who sold their business + have proceeds invested
- Inheritance recipients with significant brokerage assets + modest current income
- High-net-worth-low-income individuals (think: trust fund beneficiaries, alimony recipients with substantial settlements)
How Mike + Cornerstone handle asset depletion
Cornerstone offers asset depletion loans through portfolio + private bank channels. Mike's branch:
- Pre-screens asset portfolios to estimate qualifying income at different denominators
- Compares asset depletion vs portfolio loan vs traditional jumbo for your scenario
- Coordinates with your financial advisor or CPA for asset verification
- Structures the loan to preserve maximum investment flexibility
Free pre-qualification + asset analysis. Contact Mike or call (480) 296-6513.